STRATEGIES for Promotion of Exports from Karnataka Study on Strategies for Promotion of Exports from Karnataka TABLE OF CONTENTS Strategies for Promotion of Exports from Karnataka - Summary
Chapter No. - 1 Chapter No. - 5 1 Preamble, Objectives, Scope & Methodology 17 5 Strategies for Export Promotion 63 A Export Promotion measures 67 Chapter No. - 2 B Incentives and Concessions under Industrial Policy 2014-19 71 2 Overview of Export Performance of Karnataka 18 C Review and Monitoring Mechanism 74 2.1 Karnataka Economy & Sectoral Shares of GSDP at Current Prices 18 D Appointment of Export Commissioner for the State 75 2.2 Natural Resources of Karnataka 19 E Strategies Proposed 78 2.3 Exports of Karnataka 21 F Shelf of Projects identied for the growth and development of 83 2.4 Products having Export Potential from Karnataka 26 Exports during the 12th plan period 2.5 Projection in the Growth of Value of Exports of Karnataka by 2019 28 G Areas and Goods for Anti Dumping and Tariff Protection 86
Chapter No. - 2 Exhibit 3 Current Status of Infrastructure & Bottlenecks 29 Illustrative view of the export process in India 87 3.1 Roads 29 3.2 Railways 31 3.3 Seaports 32 3.4 Airports 35 3.5 Inland Container Depot (ICD) 36 3.6 Container Freight Stations (CFS) 37 3.7 Special Economic Zone (SEZ) 37 3.8 Foreign Direct Investment in Karnataka 40
Chapter No. - 4 4 Sectoral Strategies for Exports 41 4.1 Core Market Strategy 41 4.2 Sector / Product Specic Strategy 41 Study on Strategies for Promotion of Exports from Karnataka
1. EXECUTIVE SUMMARY
The Foreign Trade Policy of Government of India 2009-2014 sets out a goal of doubling India's export of goods & services to achieve the objective of doubling India's share in global trade by the end of 2020. To achieve this goal, all States, including Karnataka are required to play a signicant role to contribute to the growth of exports.
Analysis of Karnataka's basket of exports in 9 product groups provides a background for projecting exports. Such projections made with reference to growth rates and potential for the various products groups. The average value of exports for three year period covering 2011-12, 2012-13 and 2013-14 was Rs. 2.56 lakh crores. The sector-wise variations in the growth patterns was observed at a low of 4% (iron ore & minerals) and a high of 18% (in the case of electronics and computer software) in the corresponding period. Accordingly, projections need to be levelled with reference to the growth patterns between commodities.
The projections of exports from Karnataka with reference to Rs. 2.56 lakh crores (past three years average) for period 2015 to 2019 have been made. The export is projected to reach Rs. 5.92 lakh crores in 2019 from the present level of Rs. 2.56 lakh crores. These gures have been stacked up taking in to account expected growth in each of the product groups in the coming 5 years.
Karnataka's Gross State Domestic Product (GSDP) at constant prices (2004-05) which was Rs 2,86,410 crores in 2011-12 has increased to Rs. 2,96,658 crores in 2012-13 and stood at Rs. 3,11,628 crores in 2013-14. The level of per capita GSDP at constant prices which was Rs. 42,218 in 2011-12 has increased to Rs.43,075 crores in 2012-13 and stood at Rs.44,857 in 2013-14
Karnataka's Gross State Domestic Product (GSDP) at current prices which was Rs 4,63,243 crores in 2011-12 has increased to Rs. 5,24,502 crores in 2012-13 and stood at Rs. 5,93,811 crores in 2013-14. The level of per capita GSDP at current prices which was Rs. 77,491 in 2011-12 has increased to Rs. 86,864 crores in 2012-13 and stood at Rs. 97,386 in 2013-14
Service Sector constitutes a major share in the State GSDP at 61.40 %, Industry contributes 24.50% & Agriculture contributes 14.10%.
Karnataka is endowed with rich agricultural, horticultural and mineral sources viz. iron ore, limestone, gold, granite & manganese etc.
To achieve the growth of exports from Karnataka, strategies and interventions would be required from the stakeholders including Government.
Fig 1.1: Commodity wise current exports
01 02 Study on Strategies for Promotion of Exports from Karnataka
Figure 1.3 illustrates the building block approach used to stack up incremental exports for each of the product group through Product-Market matrix
Fig 1.3: Illustration of stack up of exports in a product group
Diversifica on: Enter new markets with new products (Ex: Product Innova on Centres for Europe and Emerging markets)
Product Development: Improving exports by crea ng new products for exis ng markets (Ex: Gaming Apps for Russia)
Market Development: Improving exports by venturing into new markets with current export commodi es (Ex: So ware exports to Ghana and Chile)
Penetra on: Improving exports in exis ng markets with current export commodi es (Ex: So ware products in USA)
1. Approach to build competitive and effective strategies
Product-Market approach is being applied to estimate growth rates for exports of each of the product groups. The existing and potential markets for each of the product groups have been These strategies are supported by effective action plans to address aggressively by building identied and estimated import scenarios have been forecasted for these countries, based on on existing strengths and mitigating weaknesses in the State's infrastructure and trade secondary data available across many sources. promotion. Soft and hard interventions are also planned to keep the State equipped to tap emerging opportunities and effectively face forecasted threats. For each of the product groups, separate strategies have been built for existing and new markets. The approach used is to clearly identify in which of the markets the State is required to These strategies basically evolve from the Product-Market Development Plan suggested by aggressively harvest the advantages and market linkages and where pioneering efforts are Department of Industries & Commerce. (Refer Fig 1.4) needed to develop the trade. (Refer Fig 1.2)
Fig 1.2: Product-Market grid approach to build growth strategies s oup oduct Gr Pr
Fig 1.4: Product-Market grid suggested by Department of Industry and Commerce
03 04 Based on this strategic approach the projections for exports of each of the key and important Table 1.2 product groups are made. (Refer Table 1.1) Sector Growth Rate Basis Table 1.1 : Projections of exports by Product groups Electronics, Computer Software 18% NASSCOM projections for the industry Gems & Jewellery 5% Gems & Jewellery Export Promotion Council (all India) (in Rs. crores) Incremental Exports from each of the strategy Petroleum & Petroleum Products 13% Trends in Petroleum imports of target countries for Indian exports 3 Years Readymade Garments 13% Average Growth rates of exports of readymade garments from Average of Incremental Sl 2018-19 New Market New Product Karnataka of 11% and a small incremental of 2% to provide Sector-wise Commodities actual exports Exports Penetration Diversification No. Projections Development Development for penetration of new markets (2011-12 Planned till 2013-14) Engineering Products 46% Karnataka's YoY growth rate has exceeded 36% in the last 3 years. 1 Electronics, Computer Software 380857 156553 224304 156553 23483 23483 20782 New initiatives as envisaged in the Strategy Paper are conservatively expected to take this figure to 46% 2 Gems & Jewellery 50889 24129 26760 14477 4826 4826 2630 Basic Chemicals, Pharma 21% Export growth on YoY basis has been around 12%. New initiatives 3 Petroleum & Petroleum Products 63173 30908 32264 21636 4636 4636 1345 and Plastic Goods like Ayurvedic medicine exports contribute to incremental exports
4 Readymade Garments 17357 8238 9120 6178 1236 1236 465 Agri and Processed Food Products 22% The YoY growth has been between 15 - 18%. Emphasis on Geographical Indicators and additional measures like 5 Engineering Products 34170 12936 21233 12936 3234 3234 1824 Coffee processing hub contribute to an additional 4 - 7% 6 Basic Chemicals, 16949 8078 8871 6463 1616 796 0 Iron ore etc 0% No growth is projected in this area since the regulatory Pharmaceuticals & Plastic goods framework is unclear
7 Agri. & Processed food products 15804 7168 8636 5734 1434 717 745 Misc and others 6% The rate of growth is presently around 5%. With the impetus including coffee products, provided a small increment of 1% has been factored cashew, spices, gherkins, rose, onions, marine products Overall 18% The overall growth derived is around 17 - 18% 8 Iron Ore & Minerals 1344 1203 141 84 58 0 0 (Incl. granites)
9 Misc and Others 11497 6661 4836 0 0 0 0 Mapping of incremental growth to specic strategies Total 592039 255874 336164 224062 40522 38927 27792 The differential between the 3 years actual exports (11-12 to 13-14) is Rs. 336,165 crores (i.e. 592039-255874). The contribution of each strategic initiative is as follows: The incremental exports coming from each product group are projected in relation to certain market indicators such as growth rates projected by trade bodies, reports on key indices of Penetration strategy: This strategy focuses on increasing the export penetration of existing performance of the emerging markets, projected GDP growth rates of key countries and products in existing markets. The YoY growth should be achieved if the sector wise trends are contribution of their imports to their GDP. The base exports considered for growth are taken as maintained without any special interventions. This amount is projected at Rs. 224,062 crores. average of three years exports, from 2011 till 2014. The year 2013-14 is not taken as base year for New Market Development: The focus of this initiative is to develop new markets for existing the projections considering Rupee depreciation in this period. products e.g. South America, Africa etc. These markets have been identied based on the The basis of the projections, duly indicating the sector wise growth rates and the attendant analysis of exports of competing countries for different products e.g. Bangladesh for garments. assumptions are elaborated in detail in Table 1.2. The approach is to project growth rates on a The net incremental exports due to this strategy is projected at Rs. 40522 crores. valid basis for each sector and to factor in increments on account of measures to boost exports. New Product Development: The focus of this strategy is on developing new exportable products for existing/new markets. An example is that of gaming software, mobile applications etc. The net incremental exports due to this strategy is projected at Rs. 38927 crores.
Diversication: The focus of this strategy is on diversifying into new areas hitherto unexplored for both existing/new markets, e.g. alternate energy, electric cars, medicinal plants etc. The net incremental exports due to this strategy is projected at Rs. 27792 crores.
05 06 Study on Strategies for Promotion of Exports from Karnataka
Year wise projections are given in the Table 1.2 ii. Key initiatives and interventions required to promote exports and meet projections for next 5 years (Refer Fig 1.4) Table 1.2 : Year wise Export Projections
Fig 1.4 : Key initiatives and interventions Sl No. Sector-wise Commodities 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
1 Electronics, Computer Software 156000 178000 185223 220415 262294 316064 380857
2 Gems & Jewellery 24483 24175 25377 30198 35936 42754 50889 KNOWLEDGE HUB AVIATION HUB Knowledge Reten on and Elimina ng current hurdles to make 3 Petroleum & Petroleum Products 33915 35392 34890 40472 46948 54459 63173 Innova on Centres Bangalore as Avia on Hub on the IT/ITES, Electronics Hub 4 Readymade Garments 7670 8900 9342 10884 12680 14835 17357 lines of Dubai Leveraging on Industry's interests 5 Engineering Products 12568 17978 18872 21891 25394 29457 34170 pinned on Bangalore 6 Basic Chemicals, 8512 9562 9775 11193 12816 14738 16949 COFFEE PROCESSING HUB Pharmaceuticals & Plastic goods Leveraging on highest contributor to GI and IPR SPACE Na onal exports 7 Agri. & Processed food products 7066 8315 8728 10125 11745 13624 15804 Aggressively provide impetus to GI Global Roas ng Hub under PPP including coffee products, and IPR products cashew, spices, gherkins, rose, MEDICINAL PLANT SCIENCES onions, marine products CENTRE 8 Iron Ore & minerals 1735 739 742 861 998 1158 1344 AEROSPACE HUB U lisa on of strengths in rich (Incl. granites) Leveraging on current strengths in medicinal plants and knowledge aerospace engineering resources 9 Misc and others 6419 7357 7051 7968 9004 10174 11497 R&D Hub for medicinal plant science Total 258,368 290,418 300000 354007 417813 497273 592039
JEWELLERY DESIGN HUB ALTERNATE ENERGY HUB Jewellery and Gems Fashion House Capitalising on increasing global Promo ng organised and branded demand for alternate energy A. Soft Interventions jewellery and precious stones Solar / Windmill / Electric cars product crea on centres i. Govt. of India's Foreign Trade Policy, annual supplement 2013-14 provides for the following features: 3 % interest subvention scheme towards export credit Harmonizing of Zero Duty EPCG and 3% EPCG Scheme into one scheme which will be a Zero Duty EPCG Scheme covering all sectors. The city of Bangalore is relatively well equipped and capable of turning itself in to an The total number of countries under Focus Market Scheme and Special Focus Market Aviation Hub to cater to the needs of the industries and hence resulting in a positive impact Scheme becomes 125 and 50 respectively . on exports. The Aviation Industry is keenly looking at the city becoming an aviation hub and Market linked Focus Product Scheme extended beyond March 2014 for exports to USA State would take all possible steps to eliminate any hurdles and build this as a very and EU in respect of items falling under Chapter 61 and Chapter 62 of ITC (HS). competitive resource for the State New guidelines to promote SEZs. Focus on market diversication to continue. The State continues to play its role as a key player in promoting electronics and software Steps to be initiated for reducing transaction cost of exports. exports for the country. It is planned to create innovation centres to retain and utilize It is noted that Policy is being announced Year-on-Year. It would be preferable that it is knowledge resources in creating innovative products and services to meet global announced for a Five-Year period and provisions for intervention for improvements during the requirements. This infrastructure is extremely essential in retaining the knowledge resources period. Such a system would be useful from the point of view of the stability as also enabling (knowledge workers) who are currently being lured to competitive Nations for better work improvements. environment and perceived benets
The features of the Foreign Trade Policy would provide the framework for the State Government The State is planning to leverage the rising global demand for alternate energy in most of the to evolve strategies for enhancement of exports. sectors from automobiles to power generation. Interventions are suggested to build Karnataka State as a hub for research and creating products in the space of alternate energy like solar panels and products, wind mills, brake energy, power transmission products, electric vehicles manufacturing, hybrid vehicles manufacturing etc.
07 08 Study on Strategies for Promotion of Exports from Karnataka
The key initiative is to capitalize on existing resources and capabilities in Jewellery and Adapting branding of several unique products like silk, ayurveda, coffee, several agri Gems manufacturing. Jewellery Fashion House is being suggested to create a forum and products to create value while competing with other exporting Nations / States in global infrastructure to promote branding of the jewellery and precious stones in the global market. markets. The product creation centre focusing on design needs and innovation in jewellery and gems would provide impetus to this action plan v. S-T (Strengths-Threats) Strategies aim to utilize existing strengths enabling to avoid identied threats in the market place iii. Summary of key initiatives and strategies built on strengths and weaknesses of the i. To eliminate threat of increasing competition from various Nations/States in the sector of State of Karnataka and taking into account perceived opportunities and threats in electronics, IT/ITES, sector specic SEZs need to be created resulting in economies of global markets. S-O (Strength-Opportunity) strategies aim to utilize existing strengths scale and differentiation in the services. to tap identied opportunities in the market place. ii. Threat of increasing competition in ready made garments from Sri Lanka, Bangladesh To leverage strengths in natural resources in ores, limestone, agri products and marine to and Thailand needs to be eliminated with the strength of being consistent garments grab opportunities in emerging African markets. exporter by establishing Textile Parks and Fashion Houses promoting low cost and Leveraging on dominant position in coffee cultivation in India, grab the opportunity to differentiated garments to existing and new markets. become Coffee Roasting Hub for global markets. To meet jewellery requirements in rapid growth markets, establish a Jewellery Designing vi. W-T (Weaknesses-Threats) Strategies aim to eliminate existing weaknesses that would Centre or a Jewellery Fashion House in the State. help avoid identied threats in the market place To grab increasing opportunities in the global markets towards hybrid vehicles, create i. To eliminate all weaknesses regarding non-adherence to international standards on agri a hub for innovation and Product Creation Centre specializing in electric and solar or marine products to avoid threat of not clinching export orders from focus markets. vehicles. ii. To provide pre-inspection facilities at custom bounded warehouses to avoid loss of To leverage on existing strengths of global HCV players present in the State, promote export orders . creation of transmission or other critical parts hub in the State. iii. Currently the 4th leading State in attracting FDI, Karnataka could leverage through the To promote 'Mysore Silk' as a brand and establish it as fashion essential in Western and conduct of sector specic investment forums or expo to attract investments and avoid Middle-East markets. opportunity losses. To build on existing garments exports and expansion across rapid growth markets, especially African countries like Ghana, South Africa, Egypt and Nigeria. vii. Incentives and Concessions which are offered to exporters under the Industrial Policy To promote IT/ITES and Electronics exports in new rapid growth markets. 2014-19 of the Govt. of Karnataka are detailed in Chapter - 5. To execute a Knowledge Hub (for retention and innovation) in the State to grab opportunities in product innovation and creation across the globe. The Trade bodies have indicated that these incentives and concessions have been helpful to exporters. However, they have also expressed the n eed for more initiatives for encouraging iv. W-O (Weakness-Opportunity) Strategies aim to minimize existing weaknesses that are exporters. acting as hurdles to tap identied opportunities in the market place To eliminate hurdles like high tariffs, incompetent airports and fewer iers resulting in viii. Other soft interventions from the State Government suggested are as follow: grabbing the opportunity of making Bangalore as the Aviation Hub. Export Awareness Programmes. To eliminate hurdles in connectivity and infrastructure related areas to bring in Export Training Programmes. competitive advantages relating to transportation costs of exports. Export Management Training Programmes. To encourage and equip all stakeholders to meet EU, HACCP and FDA standards Seminars, Workshops & Conferences. resulting in consistent and value added exports to focus on new markets. Interaction and Open House Meetings. To design and implement certain effective policies to retain knowledge and create Participation in National/International Exhibitions & Trade Fairs for Promotion resources to remain in the State yielding in product innovations and new process of Trade developments. Financial support to the all Artisans, SC, ST, Women Entrepreneurs of Micro and To re-catapult the iron ore exports by taking appropriate measures. Small enterprises, who participate in the Trade Fair and Exhibitions. Conferring State Export Awards for Export Excellence.
09 10 Study on Strategies for Promotion of Exports from Karnataka
Market Development Assistance (MDA) Scheme for Overseas Visits / Trade Fair for Expediting completion of projects approved under ASIDE Scheme. business promotion. Promoting at least 10 sector specic SEZs across the State. Reverse Buyer-Seller Meet through Market Access Initiatives and Market Development of Chennai-Bangalore Industrial corridor. Development Assistance of Govt. of India. Development of Bangalore Mumbai Economic corridor. Disseminating Overseas Live Trade Enquiries. Gems & Jewellery SEZ at Bangalore. ASIDE Scheme. Upgradation of Seaports and Airports. WTO and IPR Relay Cell has been established at VTPC. Development of minor ports across the coastal region. Incubation Centre, Facilitation Cell, R&D Cell, Entry strategies. Jewellery Designing Centre at Mangalore. Assisting the traders/exporters in certication for the export/ import of commodities. Improving connectivity from industrial areas to State highways, National highways VTPC is authorized to issue Certicate of Origin (Non Preferential). and Sea / Airports. Conducting of Short Term Courses in association with IIFT New Delhi. Proposed Textile parks at Mysore and Chamarajanagar. Trade Point to provide live trade enquiries, Global Directory Services & Online Establishment of Granite Park at Chamarajanagar. Trading facility. Development of Food Parks at Jevargi, Malur, Bagalkot and Hiriyur. NIMZ at Bidar, Gulbarga, Kolar and Tumkur. In addition to the above, trade facilitation measures have also been initiated by VTPC for the Promoting industrial investments by exporting units in SEZs. benet of the exporters. Promoting private investments on rakes for rail transportation of containers, on similar lines as Box trains on the Bangalore-Chennai, Bangalore-Mumbai and Bangalore- VTPC, Nodal Agency for promoting exports, is playing its mandated role Mangalore routes. of conducting programmes & events at different levels. Considering the Promoting cargo complexes and container freight stations at large industrial areas and along the export corridors. limitations of VTPC, it would be a useful strategy to strengthen VTPC to Establishment of Spice Parks at Shakaleshpur, Chamarajanagar, Bydagi, and play a proactive role in facilitating exports across Karnataka. Kushalnagar. Improving facilities for screening of export cargo at air cargo complexes, ICDs and B. Hard Interventions seaports for speeding up the process. Providing facilities for pre-inspection shipments at the custom bonded godowns. i. Infrastructure Promotion of sector specic clusters. Export infrastructure is a key to support exporters for movement of goods and logistics of Promotion of industrial and logistic parks. shipment. Infrastructure development needs hard interventions from the Government. Most VTPC and Exporters’ Association in Karnataka may consider joining hands for the infrastructure projects require a longer time horizon and therefore, strategies for following: development could be categorized as follows: a) Create warehousing facilities overseas for exporters near transit ports at Colombo, Short & Medium term strategies Singapore, Dubai and one at Netherlands / Belgium. These transit ports would help Long term strategies transshipment of goods on main line vessels and serve as gateways for foreign trade. b) Explore the potential new and emerging markets in South Asian Association for Such an approach would be useful in according the right priorities for bridging infrastructure Regional Co-operation (SAARC) region, Asian, African and European countries. gaps, which are doable in a shorter period horizon of 3 to 5 years and planning larger projects The Market Access Initiative (MAI) scheme of the Ministry of Commerce, Govt. of which require relatively a longer period and in different phases. India could be utilized for partial funding to carry out studies. c) Introduce new schemes in consultation with the Exporters’ Association. ii. Short & Medium term strategies d) Leverage ASIDE scheme for bridging infrastructure gaps and viability gap funding Identication of infrastructural gaps and taking up projects in the short & medium term for projects in PPP mode. would be required for drawing up the order of priorities. An identied shelf of projects for e) Sensitize C&F agents of the exporters to mention correct State Code of Karnataka in lling infrastructure gaps are as follow: all the documents to get a true picture of exports.
11 12 iii. Long Term Strategies Seaports Developing Mega Port at Tadri considering the vast land available, potential rail link and Road Connectivity road connectivity. SPV has already been created in this regard. The Hassan - Mangalore (NH48) needs to be doubled for providing speedy connectivity NMPT Vision 2020 has referred to creating Mega Container Terminal in the long run. to New Mangalore Port. Doubling would smoothen the movement of trafc and possibly Creating a Mega terminal will be useful to render NMPT as a potential port for main line ease congestion. vessels enabling direct exports. Expediting implementation of Suvarna Karnataka Development Corridor Programme Expansion of Karwar port by addition of berths and deepening the draft for receiving and developing industrial export pockets at locations on corridor highways. larger size vessels. Periodic maintainenace and upgradation of National highways viz., NH4, NH7, NH48 Use PPP models for generating investments in seaport projects (greeneld and and important State highways. browneld). Handing over of State highways to National highway authorities for development and maintenance which are facilitating the movement of export / import cargo. Airports Expansion of the BIAL along with facilities for rendering it as export hub for air borne Railway Connectivity cargo. Speeding up of railway network between Hubli and Karwar to provide the impetus for The possibility of utilizing the old terminal building at Mangalore Airport for converting developing Karwar port as an alternate gateway for exports from Northern and Central to an air cargo complex should be seriously taken up with the Customs Dept., and the part of Karnataka. Mangalore Airport Authorities. VTPC or MSIL may be designated as the custodian of the Strengthening and development of Railway connectivity to Seaports from Northern Customs Dept., for operating the air cargo complex in view of their experience related to Karnataka and Southern Region. exports. This would render effective utilization of the space and creation of the required Doubling of railway lines between Mumbai-Bangalore-Chennai under ‘PRIDE’ Corridor facilities for air borne cargo from the coastal region. Doubling of railway lines between Bangalore-Mangalore Expansion of facilities at Belgaum or Hubli for facilitating air borne cargo from the North Karnataka supports rail connectivity projects through interventions and participation. and Central region of Karnataka.
Inland Container Depots (ICDs) Special Economic Zones (SEZs) / Parks / Regions Enhancing the capacity of ICD at Belgaum for facilitating exports from North and Promote investments for expansion of existing sector specic SEZs for the Central Karnataka. manufacturing sector for enhancing growth by leveraging the current status. Establishment / development of ICD/CFS in 10 potential locations such as Dakshina Promote investments in new sector specic SEZs / Parks, Aerospace, Hardware, NANO Kannada, Bangalore, Mysore, Udupi, Belgaum, Dharwad, Hassan, Uttara Kannada, technology, Biotechnology, Pharma etc., where Karnataka has potential strengths. Kodagu and Bellary. Develop industrial pockets in Special Investment Regions (SIRs), ITIRs, NMIZ in line Enhancing the capacity of ICD at Hassan for facilitating exports from the Textile, Food with the guidelines of the Govt. of India. Processing and Pharma SEZs at Hassan as also coffee, spices and other commodities from Kodagu and Malnad region. The 60 approved SEZs projects include 47 IT / ITES, 3 Biotech SEZs, 1 airport based SEZ and ICD at Whiteeld is congested and scope for expansion is limited due to land availability 9 sector specic SEZs. The 61 approved SEZs will have an investment of Rs. 37,178 crores issues. In the circumstances, it would be appropriate to plan for additional capacity of providing employment for 11,64,645 persons. ICD at Malur, which has rail link. A Study instituted by VTPC to select optimal location for development of ICD / CFS has Presently, 25 SEZs are operational with an investment of Rs. 29,530 crores providing an identied ten districts viz., Dakshina Kannada, Bangalore, Mysore, Udupi, Belgaum, employment for 1,93,743 persons. Dharwad, Hassan, Uttara Kannada, Kodagu and Bellary. The exports from SEZs in Karnataka, which was Rs. 25,000 crores during 2011-12 has increased to Rs. 34,534 crores in 2012-13 and stood at Rs. 51,200 crores during 2013-14. Correspondingly, the investment has increased from Rs. 4,591 crore, Rs. 17,862 crores and Rs. 29,531 crores respectively.
13 14 Study on Strategies for Promotion of Exports from Karnataka
Shelf of Projects identied under ASIDE Scheme for implementation during Abstract: 12th Plan period Goods Type No of Gls % Contribu on Agricultural 15 47 % In total 62 projects are identied with an investment of Rs. 2738.68 crores for development of Handicra 13 41 % critical infrastructure which are essential to support exports with ASIDE share of Manufactured 3 9 % Rs. 1562.21 crores. The projects are being pursued for sanction and approval under ASIDE in a Foodstuff 1 3 % phased manner in a span of 5 years. Total Gls 32 100 % Karnataka stands 4th in attracting FDI in the country. The cumulative inows from April 2000 to March 2014 stood at US $ 12.67 billion (6% of total FDI inows in the country). The sectors Way Forward receiving highest FDI inows are minerals, tourism, information, biotechnology, power, health, The growth of exports from Karnataka requires full involvement and commitment from education, food processing and textiles. various sectoral departments viz., Agriculture, Horticulture, Mines & Geology, Industries & Commerce, Infrastructure Development Department, Public Works Geographical Indications in Karnataka Department etc. It is suggested that, each Department may be asked to consider Karnataka tops the charts with the highest number of Registered GIs in the country (Refer allocating at least 5% of its budgetary allocation year-on-year for participating in export Table 1.3) and the State plans to aggressively promote and market these through well infrastructure related projects. planned promotion and facilitation policies.
Creation of a Special Fund / Viability Gap fund through budgetary support for Table 1.3 participating in export infrastructure projects in the PPP models. The fund could be used for participation in development of infrastructure such as roads, seaports, airports, Inland Sl No. Products Goods Sl No. Products Goods Container Depots (ICDS) / Cargo Freight Station (CFS), road connectivity etc. 1 Mysore Silk Handicra 17 Ilkal Sarees Handicra s 2 Mysore Agarbathi Manufactured 18 Ganjifa cards of Mysore (Karnataka) Handicra s A Committee chaired by Chief Secretary, Govt. of Karnataka may be constituted with 3 Bidriware Handicra 19 Navalgund Durries Handicra s Additional Chief Secretaries / Principal Secretaries of key departments as members for Channapatna Toys & Dolls Karnataka Bronze ware 4 Handicra 20 Handicra s prioritizing and approval of export infrastructure projects. The funding support for such 5 Mysore Rosewood inlay Handicra 21 Molakalamuru Sarees Handicra s projects could be through pooling of the proposed budgetary allocation of 5% and 6 Mysore Sandalwood Oil Manufactured 22 Monsooned Malabar Arabia Coffee Agricultural Special Fund. 7 Mysore Sandal Soap Manufactured 23 Monsooned Malabar Robusta Coffee Agricultural 8 Kasu Embroidery Handicra 24 Coorg Green Cardamom Agricultural 9 Mysore Tradi onal Pain ngs Handicra 25 Dharwad Pedha Foodstuff 10 Coorg Orange Agricultural 26 Devanahalli Pomello Agricultural 11 Mysore Betel leaf Agricultural 27 Appemidi Mango Agricultural 12 Nanjanagud Banana Agricultural 28 Kamalapur Red Banana Agricultural 13 Mysore Jasmine Agricultural 29 Sandur Lambani Embroidery Handicra 14 Udupi Jasmine Agricultural 30 Byadagi Chilli Agricultural 15 Hadagali Jasmine Agricultural 31 Udupi Ma u Gulla Brinjal Agricultural 16 Kinhal Toys Handicra s 32 Bangalore Blue grapes Agricultural
15 16 17 PREAMBLE, OBJECTIVES,SCOPE&METHODOLOGY
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Rs 1- a 1 t 18 CHAPTER Study on Strategies for Promotion of Exports from Karnataka
Sl No. Sector 2011-12 2012-13 2013-14 Iron Ore 13 Trade Hotels and Restaurants 14.13 13.41 12.69 80% of magnetite ore is available. 14 Banking and Insurance 6.02 5.96 6.10 Karnataka has the second largest deposits of iron ore. 15 Real estate, Ownership of Dwellings and 17.63 19.08 20.68 The State has over 9,000 million tonnes of iron ore resources, the bulk of which is magnetite. Business services The average production is 47 million tonnes. 16 Public Administra on 3.74 3.76 3.74 The production is mainly concentrated in Bellary/Hospet area Chitradurga, Tumkur and 17 Other services 8.45 9.37 10.60 Bagalkot districts. Services Sector 56.86 58.94 61.40 The Iron Ore exports of Karnataka amounts to Rs. 739 crores. Total GSDP 100.00 100.00 100.00 The State is the third largest producer of Steel in the country.
2.2 Natural Resources of Karnataka: Limestone 30% of India’s total Limestone reserves is available in the State. Estimated resource of 51,000 million tonnes spread across the districts of Gulbarga, a) Agriculture: Bagalkot, Belgaum, Chitradurga, Tumkur, Shimoga and Uttara Kannada. Agriculture is one of the most essential attribute of Karnataka’s economy. The topography of Average production is14 million tonnes. Karnataka such as the city's relief, soil, and climate immensely supports the agricultural activities in Karnataka. Gold Total reserves contributed by the State is 64%. Karnataka's relief, soil conditions, and climate jointly contribute in growing crops in the city. Karnataka is the only State producing primary gold in the country through the State owned Agriculture is considered to be one of the primary occupations for the inhabitants of Karnataka. Hutti Gold Mines Ltd. Majority of the people in Karnataka are involved in growing crops especially in the rural area. The State has produced nearly 900 tonnes of gold during last 150 years from KGF & Hutti - The major crops are millets, paddy (rice), maize, moong (pulses), groundnut, red chillies, cotton, Maski schist belts. soyabean, sugarcane, rice, turmeric, wheat, barley, mustard, sesame, and peas. Other cash crops There is great potential for exploration with the state-of-the-art technology for gold, sown in Karnataka apart from sugarcane are cashews, cardamom, betel (areca) nut, and grapes. platinum, precious and semi-precious minerals.
Manganese Karnataka is also highly potential for its horticultural production and ranks second in this aspect Total reserves accounts to 36.5%. in India. Horticulture generates 40 percent of the total income of the State. Karnataka's Karnataka hosts the largest recoverable reserves of manganese ore in the country. agricultural products also include raw silk which has the highest production range among all The deposits of manganese ore are mainly found in Sandur schist belt (Bellary district), other States in India. Shimoga schist belt (Shimoga district), Chitradurga schist belt (Chitradurga and Tumkur districts) and North Canara schist belt (Uttara Kannada district). Karnataka with its ten different agro-climatic zones and other bounteous natural advantages The estimated resource is 107.36 million tonnes. offers immense opportunities for high growth in agriculture and allied sectors. It is imperative The average production is 1.83 lakhs metric tonnes. that Karnataka takes advantage of the modern practices, technologies and develops strategies to Granites leverage the growing demand in both domestic and international market. Karnataka State is bestowed with vast resources of granite deposits. 500 granite units in Karnataka constitute 50% of the granite units of India. b) Mineral & mineral products: The Average production of granites of the State stands at 1.96 lakhs cu.m Karnataka holds premier position in the country with regard to resources of Gold, Manganese Granite Exports from Karnataka stood at Rs. 4,200 crs in 2013-14. Granites are exported to Turkey, Netherlands, Albania, Colombia, Philippines, UAE, ore, Bauxite, Iron ore and Limestone. Austria, Iran, Bahrain, Algeria, Malaysia, Singapore, Poland, Russia, Kuwait, Tanzania etc.
19 20 Study on Strategies for Promotion of Exports from Karnataka
2.3 Exports of Karnataka Table 2.3.1 : Export Performance of Karnataka State Value of exports (Rs. crore at current prices) Sl No. Commodity Karnataka has a long tradition of overseas trade. Historically, Karnataka has been a major 2011-12 2012-13 2013-14 exporter of commodities like Coffee, Spices, Silk, Cashew nuts, Handicrafts and Agarbathies. In 1 Electronics, Computer So ware & BT 135,660 156,000 178,000 the last two decades, the State has emerged as a major player in the export of Engineering goods, 2 Readymade Garments 8,143 7,670 8,900 Readymade garments, Leather goods, Chemicals, Minerals & Ores etc. Since the second half of 3 Petroleum & Petroleum Products 23,418 33,915 35,392 the 1990's, Karnataka has carved out a niche for itself in the global market place as the 4 Engineering Products 8,263 12,568 17,978 knowledge and technology capital of the Country. The State has made rapid and spectacular 5 Iron Ore & Minerals (incl. Granite) 1,134 1,735 739 strides in the new economy. Information technology, Biotechnology and Research & 6 Silk Products 673 654 650 Development institutions have enhanced Karnataka's achievements at National and global 7 Coffee Products 3,173 3,534 3,598 levels. Karnataka accounts for more than one third of electronics & computer software exports 8 Basic Chemicals, Pharmaceu cals & Cosme cs 5,077 7,233 8,300 from the country. It is one among the top States in export of high-tech engineering goods. 9 Agri. & Processed Food Products 763 1,149 1300 10 Gems & Jewellery 23,728 24,483 24,175 Visvesvaraya Trade promotion Centre (VTPC), under the aegis of the Department of Industries 11 Cashew and Cashew Kernels 882 847 1,200 & Commerce, Government of Karnataka is the ofcial institution for compilation and 12 Handicra s 267 374 516 publication of export data of 19 commodities from Director General of Commercial Intelligence and Statistics, various Export Promotion Councils (EPCs), Commodity Boards, Export Houses 13 Leather Products 320 452 450 and Director General of Foreign Trade. However, the database from these organizations is not 14 Chemicals and Allied Products 480 491 562 adequate for analyzing the export patterns & strengths in regional pockets of the State. There are 15 Marine Products 605 632 1067 several exporters in the categories of merchant exporters and manufacturer exporters and a 16 Plas c Goods 604 788 700 complete export and import database is being built and updated regularly at the State level with 17 Spices 700 904 1,150 the assistance of Department of Commercial Tax, Director General Foreign Trade, New Delhi, 18 Wool & Woollen Products 129 150 176 Director General of Commercial Intelligence and Statistics and Commissionerate of Customs, 19 Miscellaneous and Others 4,819 4,789 5,565 Bengaluru, Export Promotion Councils, Development Commissioner, Cochin SEZ and directly Total 218,837 2,58,368 290,418 from units. The data presented here is indicative of overall export patterns of commodities from the State. Table 2.3.2: Export Growth of Previous 3 Years
Karnataka's exports in terms of value from 2011-12 to 2013-14 are shown in Table 2.1. In % of % of % of % of Growth Over Growth Over Growth Over Share 2013-14, Karnataka's exports amounted to about Rs. 2.90 lakh crores, which constituted about Sl No. Commodity 2011-12 previous 2012-13 previous 2013-14 previous year (2013-14) 14% of the Country's exports. Karnataka's exports as a percentage of GSDP have a fairly large year year share and has also increased signicantly over time. The share of exports in GSDP, which was 1 Electronics & Computer Software 135660 29% 156000 15% 178000 14% 61.29 7.36% in 1993-94, has grown to 49% in 2013-14. 2 Petroleum & Petroleum products 23418 60% 33915 45% 35392 4% 12.19 3 Gems & Jewellery 23728 19% 24483 3% 24175 -1% 8.32 Karnataka’s export of manufactured goods and commodities is relatively lower as the gures of 4 Engineering 8263 13% 12568 52% 17978 43% 6.19 software are more dominant. Strategies for increasing the exports of commodities & goods 5 Readymade Garments 8143 19% 7670 -6% 8900 16% 3.06 leveraging the strengths in the State will need to be evolved for increasing the share of exports. 6 Basic Chemicals, 5077 75% 7233 42% 8300 15% 2.86 Pharamaceuticals & Cosmetics
7 Miscellaneous and Others 4818 364% 4789 -1% 5565 16% 1.92
8 Coffee Products 3173 45% 3534 11% 3598 2% 1.24 9 Agriculture & Processed 763 14% 1149 51% 1300 13% 0.45 Food Products
10 Cashew and Cashew Kernels 882 50% 847 -4% 1200 42% 0.41 11 Spices 700 56% 904 29% 1150 27% 0.40
21 22 Study on Strategies for Promotion of Exports from Karnataka
2011-12 2012-13 2013-14 % of % of % of % of Sl No. Districts No. of Units Growth Over (Rs. in crores) (Rs. in crores) (Rs. in crores) Growth Over Growth Over Share Sl No. Commodity 2011-12 previous 2012-13 previous 2013-14 previous year year year (2013-14) 26 Gadag 3 3 4 3
12 Marine Products 605 15% 632 4% 1067 69% 0.37 27 Gulbarga 4 4 5 7 13 Iron Ore & Minerals (incl. granites) 1134 17% 1735 53% 739 -57% 0.25 28 Udupi 3854 4551 5700 79
14 Plastic Goods 604 7% 788 30% 700 -11% 0.24 29 U ara Kannada 47 56 78 10
15 Silk Products 673 -1% 654 -3% 650 -1 0.22 TOTAL 218837 258368 290418 2861 16 Chemicals and Allied Products 480 42% 491 2% 562 14% 0.19 17 Handicrafts 267 -9% 374 40% 516 38% 0.18 Table 2.3.4 : Details of Products & Exporting Countries 18 Leather Products 320 58% 452 41% 450 0 0.15 Sl No. Districts Products Expor ng Countries 19 Wool & Woollen Products 129 42% 150 16% 176 17% 0.06 1 Bagalkote Agricultural and Hor cultural commodi es (Grapes, UAE, Pakistan, Yemen, Iran, Srilanka, Total 218837 32% 258368 18% 290418 12% 100.00 Pomegranate, Mango, Banana, Maize Groundnut Green Nepal, Vietnam, Burma, grams, sugar, Bengal grams, Bajra), Minerals and Mineral Bangladesh, Srilanka, Malaysia based products & Engineering products. Table 2.3.3 : District Wise Export Statistics 2 Bangalore Rural Agricultural and Hor cultural commodi es (Onion, Rose Germany, USA, Japan, Italy, Brazil, onion, Flowers, Gherkins, Vegetables), Minerals and Malaysia, UK, Belgium 2011-12 2012-13 2013-14 mineral based products, Leather Products, Automobile, Sl No. Districts (Rs. in crores) (Rs. in crores) (Rs. in crores) No. of Units Engineering goods, Electronics and Computer So ware, Readymade garments, Electricals, Silk, Handicra s, Gems 1 Bagalkot 4 5 6 18 & Jewellery, Pharmaceu cals, Chemicals and Plas cs, Processed Foods & Handlooms. 2 Bangalore Urban 156317 184546 207000 1859 3 Bangalore Urban Agricultural and Hor cultural commodi es (Flowers), USA, Germany, Japan, Italy, Brazil, 3 Bangalore Rural 919 1087 1220 35 Leather Products, Engineering goods, Electronics and Malaysia, UK, Belgium, Thailand, 4 Belgaum 1663 1970 2207 93 Computer So ware, Readymade Garments, Electricals, Ukraine, Mexico, China, South Africa Service sector, Gems & Jewellery, Handicra s, 5 Bellary 861 1016 1100 40 Automobile, Precision Tools, Tex les, Aerospace, Pharmaceu cals, Chemicals & Plas cs) Processed Foods & Bidar 6 65 76 84 14 Handlooms Bijapur 7 6 6 7 20 4 Belgaum Engineering, Aerospace, Drugs & Pharmaceu cals, UAE, UK, France, Germany, Belgium, 8 Chamarajanagar 20 23 26 14 Chemicals and Plas cs, Electronics, Mineral based Sweden, USA, Italy, Hong Kong, products, Tex le, Automobiles, Agro Products (Maize, Switzerland and Saudi Arabia. 9 Chikkballapur 198 233 241 8 Co on, Jaggery, Sugar, Wheat, Sun Flower), Foundry Products 10 Chickmagalur 130 154 174 18 5 Bellary Engineering, Tex les, Electricals, Agriculture (Maize, Dry UAE, Europe, Africa, Turkey, 11 Chitradurga 106 125 139 10 Chilli, Onion, etc.) Processed Food, Minerals and Minerals Belgium, Germany, Canada, Mexico. 12 Dakshina Kannada 47524 56109 63078 162 based products & Automobiles. 13 Dharwad 72 85 92 50 6 Bidar Handicra s, Engineering, Agriculture and Hor culture USA,Japan, Spain, Portugal, France, (Green Gram, Soya bean, Sunflower, Bengal Gram) UAE, UK,European Countries, Brazil, 14 Davangere 40 47 52 23 Processed Food. Argen na, China
15 Hassan 348 411 450 16 7 Bijapur Engineering ,Tex le, Agriculture and Hor culture Netherlands, UK, China, USA, (Pomegranate, Grapes etc) Automobiles Canada, South Africa, UAE 16 Haveri 166 196 200 8 8 Chamarajanagar Minerals and minerals based products , Engineering, USA, UK, Pakistan, Poland, Morocco, 17 Kodagu 193 227 250 6 Food Products Turkey Kolar 18 24 28 29 16 9 Chickmagalur Engineering, Agriculture and Hor culture (Coffee, Germany, Netherland, Italy, UK, 19 Koppal 20 24 25 31 Spices, etc) Spain, Australia 20 Mandya 4 5 6 17 10 Chikkballapur Agriculture and Hor culture Products, Silk, Floriculture, China, Thailand, UAE Agro Food Products 21 Mysore 4582 5410 6000 180 11 Chitradurga Agricultural and Hor cultural commodi es (Maize, Indonesia, Malaysia, Philippines, 22 Ramanagar 1225 1447 1694 11 Groundnut, Sunflower, Gherkins), Engineering, Chemicals Vietnam and allied products, Mineral and Mineral based products. 23 Raichur 255 301 310 59 24 Shimoga 40 48 52 14 25 Tumkur 146 173 190 40
23 24 Study on Strategies for Promotion of Exports from Karnataka
Sl No. Districts Products Expor ng Countries Sl No. Districts Products Expor ng Countries 12 Dakshina Kannada Agricultural and Hor cultural commodi es (Cashew, South Africa, Europe, USA, UAE, 27 Tumkur Agricultural and Hor cultural products, (Arecanut, USA, China, Japan, Singapore, Spices), Handicra s, Engineering, Marine products, Middle East, Groundnut, Coconut etc), Minerals & mineral based Australia, Saudi Arabia, Minerals and minerals based products, Readymade products, Basic Chemicals, Pharmaceu cals & Cosme cs, Netherlands, Srilanka, Europe garments, Electronics and Computer So ware, processed Engineering, Readymade Garments, Processed Foods, foods, Petroleum and Petroleum products. Electricals.
13 Davangere Agricultural and Hor cultural Commodi es (Rice Maize, Indonesia, Malaysia 28 Udupi Electronics and Computer So ware, Engineering, UAE, USA, UK, Japan, Singapore, Gherkins, Sunflower, Co on , Groundnut, Onion) Drugs Agricultural and Hor cultural commodi es (Incl. cashews, France, Egypt, Saudi Arabia, Syria, and Pharmaceu cals, Engineering, Coconut, arecanut, Pineapple, Pepper, spices), Marine Israel, South Africa, Turkey, Jordan, products, Chemicals and Plas cs. Ukraine 14 Dharwad Engineering, Automobiles, Agriculture and Hor culture Belgium, France, USA, Australia, (Mango, Banana, Maize, Spices etc) Processed Foods, Canada, Spain, Srilanka, Russia, 29 U ara Kannada Agricultural and Hor cultural commodi es, Handicra s, USA, Poland, France, Brazil, Middle Electricals, Engineering, Chemicals and Plas cs, Ready Turkey Marine Products etc. East, Germany, Nepal, Spain, South made garments, Electronics and Engineering Valves. Africa, Australia.
15 Gadag Agricultural and Hor cultural commodi es (Groundnut, USA, Germany, Korea, New Zealand, Co on, Maize, Soyabean, Safflower), Automobiles, Israel, Bangladesh, Vietnam, Engineering & Tex les Indonesia, Malaysia, Canada, Exports of electronics and computer software, basic chemicals, pharmaceuticals and cosmetics, Philippines, UAE, Belgium, Italy, readymade garments, petroleum & petroleum products, gems & jewellery, marine products France, Canada, Malaysia. and, plastic goods have increased signicantly in 2013-14 as compared to their exports in 16 Gulbarga Agricultural and Hor cultural commodi es (Turdal), South East Asian coun res, Viz. Minerals and mineral based products (Fullers Earth & Vietnam, Indonesia, Malayasia, USA, 2011-12. The exports of silk products, handicraft products have revealed a marginal decline in Allied Products) Singapore, Australia 2013-14 as compared to 2011-12. Export of cashew and cashew kernels, engineering products, 17 Hassan Agriculture and Processed Foods, (Gherkins, Coffee, France, Spain, Germany, Ukraine, iron ore and minerals (including granites), wool & woollen products have increased sharply in Spices etc) Minerals and mineral based products, Tex les, Netherlands, Belgium, Russia Readymade Garments, Engineering, Chemicals and 2013-14 as compared to 2011-12. The exports of traditional export commodities such as Plas cs, Pharma readymade garments, coffee products, petroleum & petroleum products, engineering 18 Haveri Agricultural and Hor cultural commodi es (Groundnut, USA, Germany, Korea, New Zealand, Co on, Maize, Soya bean, Sun flower, Chilly Betel leaves) Israel, Bangladesh, Vietnam, commodities have increased signicantly in 2013-14 compared to their exports in 2011-12. The Indonesia, Malaysia, Canada, exports of agriculture & processed food products, handicrafts, leather products, chemicals and Philipines, UAE allied products and plastic goods increased marginally in 2013-14. In addition, the exports of 19 Kodagu Agricultural and Hor cultural (Coffee, Spices, Vegetables) Italy, Germnay, Spain, Belgium Processed Foods. marine products have substantially increased in 2013-14 compared to their exports in 2011-12.
20 Kolar Agricultural and Hor cultural (Onion, Rose Onion, Korea, Singapore, Switzerland, Tomatoes etc) Processed Food, Minerals and minerals Argen na Karnataka's contribution to India's exports has varied between 11% and 15%. Further, based products, Engineering, Chemicals and Plas cs. Karnataka's share in India's total exports of information and communication technology 21 Koppal Agricultural and Hor cultural (Maize, Paddy, Jowar, China, Hong Kong, Switzerland, Sunflower) Processed Food, Minerals and mineral based Holland, Indonesia, Spain, France, products has remained higher than 25% since 2005-06. Higher export performance is an products, Engineering. Italy important determinant of increasing degree of openness to export trade. Degree of openness is 22 Mandya Agriculture and Hor culture Products (Rice, Sugar, Paddy Indonesia, Malaysia measured by the ratio of value of exports to GDP at National level and by the ratio of value of etc.), Engineering, Pharma exports to GSDP at the State level. Karnataka's degree of openness to export trade has been about 23 Mysore Automobiles, Engineering, Electricals and Electronics, Asian Countries, Australia, UAE & Computer So ware, Drugs and Pharmaceu cals, Gulf Countries, La n American 47%, which is remarkably higher than that of All India (at about 27%). Increasing degree of Chemicals and Plas cs, Processed Foods, Agricultural and Countries, Canada, South Africa, openness to trade is an indicator of economic globalization. From this viewpoint, the levels of Hor cultural Commodi es, Gems & Jewellery, USA, UK, African Countries, Europe, Handicra s, Agarbathi, Silk, Biotechnology, Paints, Paper Singapore, Middle East countries, Karnataka's economic globalization have been higher than at All India level. Products, Readymade Garments, Granites, Flavours and Oman & Bahrain, China. Essence.
24 Raichur Agricultural Commodi es (Rice, Co on, Sunflower, Tur, Australia, Belgium, Canada, USA, 2.4 Products having Export Potential from Karnataka Maize, etc.) Processed Food Products, Precision Russia, Vietnam, China, Singapore Trend in value of exports of 19 commodities for the three years period covering 2011-12 to Engineering. 2013-14 has been analyzed. These 19 products have been re-categorized into 9 broad groups 25 Ramanagar Agricultural and Hor cultural commodi es, (Fresh Argen na, Brazil, Indonesia, Japan, Vegetables, Fresh Fruits), Engineering & Automobiles, UK, Netherlands, Thailand, based on the average value of exports for the three years period, a list of products having export Tex le, Pharmaceu cals, Chemicals and Plas cs Singapore, UAE potential is presented in Table-2.2 along with item-wise share of exports and potential 26 Shimoga Engineering, Tex les, Readymade Garments, Agricultural Germany, Spain, USA, Holland, destination. and Hor cultural Commodi es China, Korea, Japan, Singapore, Australia, Canada, Saudi Arabia, Netherlands
25 26 Study on Strategies for Promotion of Exports from Karnataka
Table 2.4.1 : Sector-wise Export Performance 2.5 Projection in the Growth of Value of Exports of Karnataka by 2019
Sl No. Products Expor ng Countries % of Share in Exports In light of the mandate given by the Department of Commerce, Government of India, the long 1 Electronics & Computer So ware USA, UK, Taiwan, Singapore, France 61.00 term vision envisages to make India a major player in the World Trade by 2020. The Foreign 2 Petroleum Products Mauri us, Netherlands, Yemen, Japan UAE, China, etc., 12.19 Trade Policy of Government of India 2009-2014 sets out a goal of doubling India's export of 3 Gems & Jewellery Singapore, Dubai, Sharja, Kuwait, USA 8.32 goods & services to realise the objective of doubling India's share in global trade by the end of 4 Engineering Germany, USA, Thailand, Taiwan, Mexico, Japan 6.20 2020. To achieve this goal, all States, including Karnataka have to play a signicant role to 5 Readymade garments USA, UK, Italy, Germany, Hong Kong, Turkey, 3.35 contribute to the growth of exports. incl. Woollen & Silk products Canada, Australia 6 Basic Chemical & Pharmaceu cals USA, UK, Brazil, Argen na, China, Canada, Egypt, 2.80 Malaysia. Karnataka’s basket of exports in 9 product groups has been examined with reference to growth 7 Agro and Processed Food. USA, Dubai, Brazil, Taiwan, UK, Japan, Denmark, 1.23 rate and potential for projections of exports based on average growth of previous three years. Srilanka, Netherlands, Europe, Spain France. This has been particularly in view of the variations in the growth patterns between the 8 Coffee Jordon, UAE, Israel, Spain, Sweden, Germany, Geneva, 1.24 commodities. The projected Growth of exports is shown in Table - 2.3. Bremen etc., 9 Spices USA, UAE, Japan, England, Australia, South Africa. 0.40 10 Iron ore & Minerals Saudi Arabia, UAE, Nepal, Bahrain etc., 0.25 Table 2.5.1: Projection of Exports (2015-2019)
(in Rs. Crores) Incremental Exports from each of the strategy Electronic and Computer software constitutes a major chunk of exports with 61% of total export 3 Years Average of Incremental Sl 2018-19 New Market New Product Sector-wise Commodities actual exports Exports Penetration Diversification value followed by petroleum & petroleum products (12.19%), gems & jewellery (8.32), No. Projections Development Development (2011-12 Planned engineering (6.20), basic chemical & pharmaceutical (2.80%), agriculture and processed food till 2013-14) (1.23%),readymade garments (3.35%), Coffee (1.24%). 1 Electronics, Computer Software 380857 156553 224304 156553 23483 23483 20782
2 Gems & Jewellery 50889 24129 26760 14477 4826 4826 2630
Following pie-chart illustrates percentage of product-wise average 3 Petroleum & Petroleum Products 63173 30908 32264 21636 4636 4636 1345
4 Readymade Garments 17357 8238 9120 6178 1236 1236 465
5 Engineering Products 34170 12936 21233 12936 3234 3234 1824
6 Basic Chemicals, 16949 8078 8871 6463 1616 796 0 Pharmaceuticals & Plastic goods
7 Agri. & Processed food products 15804 7168 8636 5734 1434 717 745 including coffee products, cashew, spices, gherkins, rose, onions, marine products
8 Iron Ore & minerals 1344 1203 141 84 58 0 0 (Incl. granites)
9 Misc and Others 11497 6661 4836 0 0 0 0
Total 592039 255874 336164 224062 40522 38927 27792
2527 28 Study on Strategies for Promotion of Exports from Karnataka
National Highways Nos. 4, 7, 13, 48, are the most important roads for transportation of goods & commodities to gateway ports. These highways broadened to six lanes through PPP and toll models have denitely improved the movement of goods. However, there are bottlenecks in certain pockets, which constraint smooth movement. The current status of NH 48 leading to
CHAPTER Mangalore Port is in poor condition in the ghat section. Currently, this stretch is in damaged 3 condition and almost closed for trafc. Further, this stretch is not currently broad enough for CURRENT STATUS OF INFRASTRUCTURE AND BOTTLENECKS signicant improvement, given the increasing trafc. Export is considered an engine of economic growth in the wake of liberalization and structural reforms in the economy. A sustained growth in exports is dependent on adequate and reliable The exporters from Karnataka mainly depend on the major ports at Chennai, Tuticorin, JNPT, infrastructure. Proper infrastructure will ensure reduction in the transaction cost of exports, New Mangalore Port Trust (NMPT) and Cochin for shipment of containerized cargo. thereby making exports internationally competitive. It is reported that transaction costs in India Containerised cargo is the order of the day for shipment of most of the goods and commodities are much higher compared to global standards and a part of the reason is attributed to bottlenecks except bulk cargo such as iron ore, manganese and other minerals & liquids. in infrastructure for exports. The movement of containers from Karnataka is by movement of containerized trucks to the Following are the basic infrastructure facilities required for facilitating export of goods & respective ports. The roads particularly NHs and SHs from the export pockets of the State are commodities: signicant and need continuous maintenance and upgradation towards seamless movement. Roads Railways The exporters from North & Central Karnataka mainly use Mumbai and Goa ports. The Sea Ports connectivity to Mumbai and Goa ports through proper road network from main business centres Inland Container Depot (ICD) of North Karnataka viz., Hubli, Belgaum, Bellary and Gulbarga will help faster movement Container Freight Stations of goods. Airports The carriage width details of the roads show that about 19% of National Highways, 1% of State The current status of the above are described below: Highways and 2% of Major District Roads have four lane width.The current status of roads in the State needs upgradation and broadening for achieving the objective of smooth transport. Most of 3.1 Roads the roads in the export pockets need to be linked to the nearest National highway.
The State's road network consists of National Highways (NH), State Highways (SH), Major The Government has envisaged Suvarna Karnataka Development Corridor (SKDC) District Roads (MDR), Municipal roads and other roads as well as village connectivity roads. Programme following major industrial corridors which provide for development of 8 lane The total length of various categories of roads as on December, 2011 is shown in the Table roads as follows: 3.1 below: Bidar-Bangalore via Chitradurga, Tumkur-Honnavar via Shimoga, Table 3.1 : Category-wise Chitradurga-Mangalore via Shimoga-Udupi Road Lengths (in kms.) as on Dec. 2011 Bangalore-Belgaum via Davanagere-Hubli. Category of Road Length in kms. Additional corridors have also been proposed to provide connectivity to Bidar, Bijapur and Na onal Highways 4,490 other potential locations. State Highways 20,770 Major District Roads 49,959 This major initiative, once implemented, would provide sufcient scope for development of Municipal Roads 8,366 potential export pockets as well as providing connectivity not only to the major ports but also to Other Roads 1,48,412 other potential minor ports proposed to be developed in PPP mode.
Source : Public Works Ports and Inland Water Transport Department
29 30 Study on Strategies for Promotion of Exports from Karnataka
3.2 Railways The importance of rail connectivity to the major seaports as well as to the potential minor ports would be signicant in providing alternate options to the trade for shipment of goods. The trade The rail network in Karnataka has about 2761 kms of broad gauge lines. About 410.65 kms. of is currently facing problems of congestions in major ports causing delays in shipments. the rail network is meter gauge. Conversion of this meter gauge will strengthen rail connectivity. Most of the broad gauge lines are single track and pose a constraint for smooth movement of Development of minor ports at Karwar, Tadri, Haldipur, would be useful for creating capacities passenger & goods trafc. The rail network provides connectivity to the sea ports at Chennai, for handling variety of commodities for imports and exports. There would be potential new Tuticorin, Mumbai, Mangalore, Cochin and Goa. Of these, the most signicant rail networks connecting to export pockets of Karnataka are Chennai, Tuticorin, NMPT and JNPT. The current gateways. However, development of these ports and attracting commodities would be status of the rail network is not adequate for smooth movement of rakes to the sea ports. The time dependent to a great extent on availability of network. In particular, the rail connectivity between required for reaching containers and cargo rakes to sea ports is relatively long and the trade has Hubli to Karwar would be useful in meeting the requirements of Northern and Central part of expressed this as one of the major constraint increasing transaction cost. Tracking of cargo Karnataka and hinterland of the port. movement and timely shipments are the areas of concern for exporters.
Inland Container Depots (ICD) are an important part of the rail network for movement of K-RIDE initiated by Government has resulted in formation of HMRCL, which enabled containers. The ICD at Whiteeld is constrained by capacity. The movement is also constrained completion of the rail link between Hassan and Mangalore. This experience could possibly be by the high trafc density in the rail network. explored for expediting development of rail link between Hubli and Ankola.
The status of new initiatives taken up in the State for developing railway network is as follows:
Kotturu - Harihara new railway line: has been completed and is pending clearance from Railway Safety Commissioner. This project is being executed under 2/3 & 1/3 sharing by State Government (GoK) and Ministry of Railways (MoR) respectively.
Munirabad - Mehabubnagar new railway line: Except for the route passing through Gangavathi, land has already been acquired and handed over to the railways and work is under progress. This project is being executed with cost sharing of 50:50 between GoK and MoR.
Doubling of Bangalore-Ramanagaram railway line: has been completed up to Channapatna. This project has been executed under cost sharing programme between GoK and MoR in the ratio of 2/3 & 1/3 respectively. Work on the Channapatna-Mysore line is also under progress. 3.3 Seaports
Land at Bidar for Bidar - Gulbarga new railway line: has been acquired and handed over Karnataka, situated on the Western Coast of India, is endowed with a maritime coastline of to South Central Railway and the work is under progress. However, land is yet to be acquired around 300 kms between Karwar (in the North) and Mangalore (in the South) anked by Uttara and handed over on Gulbarga side. The expenditure for this project is being shared by GoK Kannada and Dakshina Kannada districts, with favourable and strategic port locations. and MoR on 50:50 basis. The State Government has so far released Rs. 155 crore for this project. At present, in Karnataka there is only one major port viz., The New Mangalore Port. This is located at the southern end of the coastline and serving part of the hinterland of North and South Tumkur - Rayadurga new railway line: is being undertaken with cost-sharing in the ratio Karnataka. NMPT cargo prole is more focused on crude and petroleum products (60%) of of 50:50 between GoK & MoR. GoK has so far released Rs. 20 crore for this project and land acquisition is under progress. MRPL and 28% bulk cargo (iron ore & coal). Containers and break bulk cargo form the remaining 12%. Although, containerized cargo is limited, the trend reveals that this has The Government has approached MoR for taking up the following projects on PPP basis: Hubli - increased gradually and stood at 48,409 TEUs during 2012-13. The port has projected that this Ankola, Talguppa - Shahabad, Bijapur - Shahabad, Dharwad - Belgaum. Apart from these, would increase to 3.60 lakh TEUs by 2020 and plans are afoot to create more facilities for projects being taken up on cost-sharing basis between GoK and MoR are: Hassan - Bangalore, handling of containers. Kadur - Chikmagalur, Kolar - Chikballapur, Kudachi - Bagalkot, Tumkur - Davangere, Shimoga - Harihar and Whiteeld - Kolar. The development of these rail network corridors will provide an The current volume of containers is limited and it is not feasible to attract mainline vessels to impetus to industrial growth across various pockets of Karnataka as also exports in the long run. NMPT. However, there may be potential to attract more feeder vessels as well as main line
31 32 Study on Strategies for Promotion of Exports from Karnataka
vessels in the long run on achieving 3 lakh TEUs. Currently, the feeder vessels call on the port for Sl No. Port Exis ng Facili es Proposed Facili es Connec vity
picking up containers for shipment through transit ports at Colombo and JNPT, which receive 4 Tadri About 1419 acres of land at Tadri, Govt. has proposed to develop this Konkan Railway line, NH 17, NH U ara Kannada District is available mul -purpose all weather 63, NH 206 passing very close foreign going main line vessels. for development of a port. Greenfield Port under PPP. KSIIDC Linkage of Ankola - Hubli Railway is the Nodal Agency and a SPV in line is under progress. On the name of Tadri Port Ltd. has comple on this will provide good NMPT also has over 75 reefer points through which marine commodities are exported in reefer been incorporated. The following hinterland connec vity. containers. The number of reefer points have been gradually enhanced and further increase will facili es will be created: 8 berths would be u lized for iron ore coal, enable handling of more quantities of perishables. general cargo and LNG (KPCL). Ul mate Port capacity 62.36 mtpa. NMPT has recently started receiving vessels from Africa for import of raw cashew. The raw cashew is listed as an import commodity for re-export. Mangalore is one of the key destinations Further, Haldipur near Honnavar, Uttar Kannada District has been identied as a potential for export of graded cashew kernels from India. location for development of a green eld sea port. Rail connectivity from Shimoga, Talaguppa to There are 9 harbour / minor ports viz., Karwar, Belekeri, Tadri, Honnavar, Bhatkal, Kundapur, Haldipur would be useful for exploiting the potential of the hinterland. Hangarakatta, Malpe and Old Mangalore. Of these, Karwar is the only minor port handling limited quantities of cargo. Development of additional jetties and deepening the draft at Karwar Government of Karnataka has formulated Port Policy for the development of minor ports in the port would provide alternate options for export and import of goods. This could be a part of the State. Implementation of the strategies stipulated in the Port Policy will help the State to develop mid-term strategy for augmenting infrastructure to some extent. the ports in the State and provide gateways for export and import trade. The Karnataka Maritime Board Act 2011 provides for constitution and functioning of Maritime Board in the State. The Though one major port and seven minor ports exist in Karnataka, only three ports viz., Government of Gujarat constituted Gujarat Maritime Board which has successfully developed New Mangalore Port Trust, Karwar Port and Belekeri Port are active. The existing and minor ports in PPP mode. Pipav and Mundra ports are success stories in PPP mode. These ports proposed facilities and the connectivity for the ports are tabulated as follows: have provided alternate gateways of exports of containers from Northern, Central and Western India. This has also created a competitive environment for the major ports at Mumbai. Sl No. Port Exis ng Facili es Proposed Facili es Connec vity The formation of Karnataka Maritime Board needs to be expedited for providing an impetus to 1 New Mangalore The Port is well equipped to handle Container Terminal at the Railway: development of minor ports under the Port Policy. Port Trust bulk, liquid chemicals, hazardous Western Dock Arm Conversion of Hassan - cargoes, crude and POL products, Deep dra general cargo berth Mangalore line into broadgauge heavy li s, machinery, containers SPM by MRPL for carrying more tonnage with cargo handling facility of Deepening of lagoon of cargo Ports should be developed keeping in mind the broader picture giving due credit to trade patterns 37.04 million tonnes Procurement of mobile cranes Konkan Railway has given a great Port based SEZ fillip to the port / rail interface and wider issues which could enhance the chances of success of not only the ports that are and direct connec vity to Goa & Mumbai developed, but also uplift the region.
Road: Port is connected with 3 Na onal Highways viz., NH 17, NH 48 and NH 13 and is accessible to Kochi to Mumbai; Mangalore to Bangalore and Mangalore to Sholapur
2 Karwar Port Storage tank terminals with an Being upgraded under Port Connected by Konkan Railway and installed capacity of 75000 MT of Development Project and will offer road connec vity with hinterland liquid cargo about 30,000 MT be er and increased berthing and which include Davanagere, Hubli warehousing facili es, docking facili es on comple on and Northern part of Karnataka Gantry crane & other facili es. Cargo handling capacity of 24.88 lakhs MT
3 Belekeri Port This port has got a vast stacking Land has been allo ed to Private Konkan Railway Broadguage line, area and can be developed to Investors to develop this port by NH 17, NH 63 is passing very close handle about 3 to 5 million tonnes upgrading facili es to handle and linkage of Ankola - Hubli of cargo foreign bound cargo. Development railway line is under progress. work is under progress Good network of roads
33 34 Study on Strategies for Promotion of Exports from Karnataka
3.4 Airports The construction of airstrips in the districts where there are no airports within 150 kms. is being examined and a minor Airport Policy for the same is being framed. The Country's rst green eld International airport has been developed at Devanahalli, Bangalore at a cost of Rs. 2470 Crore as a passenger and cargo hub under the Public Private Partnership (PPP) mode. The airport has begun its operations in May 2008. The airport started by handling 9.8 million passengers per year and currently 12 million passengers annually. It has a 4000 meter runway and a terminal building of around 70000 square meters, the capacity of which is being enhanced. With the aim of establishing Bangalore International airport as India's leading airport in terms of quality and efciency and to set a benchmark for the future amongst Indian airports, it is built and operated to the best international standards and is a new start in Indian aviation with regard to the passenger experience on ground. The airport is growing at a phenomenal pace of 18% per annum which is higher than the National average of 16%. The facilities are proposed to be expanded to meet the requirements of increasing growth in trafc.
The existing airport at Mysore has been operationalised. However, no ights are being operated from this airport for commercial reasons. In Bellary, the Government is developing a new airport 3.5 Inland Container Depot (ICD) on PPP basis and the project development agreement has been signed with the developer. Indian Railway's strategic initiative to containerize cargo transport put India on the multi-modal Acquisition of 900 acres of land is in process. map for the rst time in 1966. Rail transport could be the cheaper option for all cargo over medium and long distances, especially if the cost of inter-modal transfers could be reduced. The existing airport at Hubli is being upgraded to International standards and the earlier Containerized multi-modal door-to-door transport provided the ideal solution to this problem. requirement of land for the expansion and upgradation of Hubli airport was 710 acres. The nal requirement of land by Airports Authority of India (AAI) is 615 acres. 520 acres has been Rail is the mainstay of Container Corporation of India (CONCOR) for its transportation plans & acquired on consent basis and about 450 acres has been handed over to AAI. Additional land of strategy. Majority of CONCOR terminals are rail-linked, with rail as the main carrier for 370 acres for Belgaum airport has been acquired and is being handed over to AAI. Memorandum haulage. The rail link also plays a major role in decongesting ports and the road corridors that of Understanding will be signed by the end of this year. The airport at Mangalore is AAI-owned lead to these ports. and maintained by them. The second runway and new terminal building complex have been constructed. CONCOR is committed to providing responsive, cost effective, efcient and reliable logistics Minor airports at Shimoga, Gulbarga, Bijapur and Hassan are being developed on PPP basis solution to its customers. There are two Inland Container Depots (ICD) at White Field, through private operators. In- principle approval of Ministry of Civil Aviation, Government of Bangalore and Belgaum. India has been obtained. Necessary land for the Gulbarga and Shimoga airports has been acquired and lease agreements have been signed with the developer. Preliminary project works 3.5.1 Inland Container Depot at Whiteeld, Bangalore: have been undertaken. Project development agreement for development of Bijapur airport has Commissioned on April 01, 1993, the ICD is located at the centre of Bangalore’s fastest growing been signed with the concessionaire. The land lease agreement has to be signed with the industrial area in Whiteeld. It is conveniently connected to NH4 and NH7 by Road and is well developer for handing over of the land. The development of Hassan airport is being taken up on connected by Road and Rail to all the major gateway ports in South India. Spread over 125.06 PPP basis. Out of the total land of 960 acres required for the airport, 536.24 acres of land was acres, the ICD has a CFS and ten warehouses along with three full length rail sidings, catering to acquired and transferred to the developer. Project development agreement was signed with the EXIM and Domestic trafc, both by Rail and Road. developers and in-principle approval has been obtained from the Ministry of Civil Aviation. Environmental clearance has been obtained from the Ministry of Environment and Forests. The ICD at White Field, Bangalore has all the basic infrastructure which include 1,93,000 Sq. Mt. of paved area, warehouse of 2625 sq.mtrs. for export and 1750 sq.mtrs. for import, 21650 The existing defence airports at Bidar and Karwar are also being developed for civil operations. sq.mtrs. of bonding; two rail siding for 45 wagons each for export and import, Reach Stackers The Government is pursuing the matter of starting the civilian operations with AAI and Ministry and fork lift of various capacities, trailer with cab, etc. of Defence.
35 36 The Department of Customs has proposed to replace the scanning equipment with modern ones 3. Any Company (private / public / Joint sector) or State Government or its agencies can for increasing the efciency of its scanning activities. Putting modern equipment will be helpful set up SEZ. in efcient scanning as well as reducing the delays in clearing containers. 4. Foreign Companies can also set up SEZs. 5. Govt. of India enacted SEZ Act 2005 and notied SEZ Rules on 10.2.2006. 3.5.2 Inland Container Depot at Desur, Belgaum 6. 100% of land has to be acquired on consent basis only and there should be no compulsory This ICD is located near Belgaum in North Karnataka and caters to the industries located in this acquisition of land. belt. ICD is adjacent to Desur railway station and 2 kms away from NH-4A. This terminal is 7. Rehabilitation & Resettlement Policy has to be implemented as per Govt. of India guidelines. designed to handle both EXIM & domestic trafc. The yard is clearly demarked for this purpose. 8. Objectives of Central SEZ Act: The Infrastructure facility at Belgaum ICD include 500 sq.mtrs. of warehouse, paved area of Generation of economic activity 18000 sq.mtrs. with stockyard capacity of 1000 TEUs, rail siding of 45 wagons, handling Promotion of exports of goods and services equipment, etc. Promotion of investment (FDI & domestic) Creation of employment opportunities However, the ICD and CFS facilities in Karnataka need to be provided to boost exports from the Development of infrastructure facilities Ports within the State. The dependence of our exporters to export their goods from ports viz., 9. Minimum area required for setting up a SEZ (As amended on 13-9-2013) Chennai, Goa, Mumbai and Cochin has increased the transaction costs. Apart from promoting container facility for cargoes, there is need to promote freezer containers for export of fresh Type of SEZ Hectares owers, fruits and vegetables. Mul Product 500 (Processing area - Min. 50% of the no fied area, Non Processing area - cannot exceed 50% of the total no fied area) 3.5.3 Inland Container Depot at Hassan Product Sector Specific / Port / 50 (Processing area - Min. 50% of the no fied area, Non Processing area - Airport / Mul Services cannot exceed 50% of the total no fied area) ICD at Hassan is operational and currently limited volumes are being moved from here to Chennai and Mangalore. Most of the commodities through ICD at Hassan are coffee and spices. Agro - based / BT / Gems & Jewellery / 10 [Built up area is 50,000 sq. mtr for Gems & Jewellery, 40,000 sq. mtr for Non conven onal Energy. BT / Agro - based / Non conven onal Energy) Non Processing area - cannot The ICD at Hassan has potential considering the requirements of SEZs for textiles, food exceed 50% of the total no fied area
processing and chemicals & pharma. While the Textile SEZ is fully operational, the other two are Informa on Technology (IT) Built up area (sq.mtrs) in the process of occupancy. Thus, this would be useful for all the three SEZs. 1.00 Lakh (Bangalore),
50,000 (Tier-II ci es) and 3.6 Container Freight Stations (CFS) 25,000 (other ci es) Currently, Container Freight Station facilities are not available in Karnataka as per the trade Non Processing area - cannot exceed 50% of the total no fied area sources. Container Freight Stations are particularly useful for aggregation of cargo in containers before shipment. The INDEV container freight station near Chennai is operated by Gokuldas 10. Incentives & Concessions as per Central SEZ Act Group for aggregation and stufng & de-stufng of garments for shipment. No detailed studies 100% FDI is allowed have been carried out on the potential for container freight stations. Considering that substantial Income Tax benets - (100% exemption for rst 5 years, 50% for next 5 years and 50% on quantities of goods & commodities are exported from Bangalore and the potential for other plough back prot for next 5 years for units and 10 years exemption in the block period of locations, container freight stations would be a good facility for exporters. In particular, 15 years for developer) exporters in MSME segment who ship small quantities and cannot utilize a full container load Duty free import of goods for development, operation, implementation and maintenance will nd CFS useful. CFS comprises warehousing facilities for de-stufng and stufng of of SEZs containers for shipment to respective destinations. Exemption from Excise Duty, CST & Service Tax Generation, transmission and distribution of power in SEZ allowed 3.7 Special Economic Zone (SEZ) Full freedom in allocation of space and built up area to approved SEZ units on 1. Special Economic Zone (SEZ) is a demarcated area with good infrastructure and exempted commercial basis from all taxes and duties to enable manufacturing and trade in a hassle free environment for Exemption from public hearing under Environmental Impact Assessment notication. export production. 2. Government of India announced the concept of SEZs in 2000.
37 38 11. Subsequently, due to the withdrawal of following incentives in the Central SEZ Act, the District wise details :
SEZs have become less attractive. No of SEZs Land in Opera onal Land in Hectares Employment in Sl No. Name of the District Minimum Alternate Tax (MAT) Exemption approved Hectares SEZs (Opera onal SEZs) Opera onal SEZs Dividend Distribution Tax (DDT) Exemption 1 Bangalore Urban 32 513.32 14 247.40 177460 2 Bangalore Rural 5 254.49 1 102.00 60 12. Incentives & Concessions as per State SEZ Policy 3 Dakshina Kannada 6 844.76 2 779.11 3611 Refund of VAT for purchase of goods excluding petroleum products. 4 Belgaum 1 106.33 1 106.33 633 100 % Exemption from Stamp Duty and registration charges for developers, co- 5 Mysore 6 75.47 2 32.04 5646 developers and 50% for units. 6 Mandya 2 74.11 0 0 0 Electricity Duty Exemption 7 Hassan 4 557.08 3 457.08 4186 Entry Tax Exemption. 8 Dharwad 1 12.51 0 0 0 Capital Investment Subsidy for CETP. (Max Rs 1.00 Crore) 9 Udupi 2 300.84 1 259.64 2029 10 Shimoga 1 14.50 1 14.50 121
Status of SEZs in Karnataka: Total 60 2753.41 25 1998.1 193746 Karnataka occupies the fourth place in terms of number of approved SEZs in the Country. The Total Exports from these State with dynamic Industrial Policy & SEZ Policy and exclusive Policies for Sectors like The sector wise approved SEZs are: SEZs are as follows: Information Technology, Biotechnology, Renewable Energy, Tourism, Textiles, Hardware, IT / ITES - 47 nos. Semiconductors, is one of the most preferred destination for investments. The State Government Biotech SEZ - 3 nos. Year Exports in Crores is planning for development of exclusive sector specic zones for Automobiles, Textiles, Sector specic SEZs - 9 nos. 2007-08 1,673.00 Aerospace, Food, Jewellery, etc., some of which could be developed as SEZs. Airport based SEZ - 1 no. 2008-09 7,608.00 Operational SEZs - 25 nos. 2009-10 10,248.00 Constantly on the path to making the ambience more conducive for investments and trade, Investment is Rs. 29,530 crores. 2010-11 18,500.00 Karnataka has been proactive in spearheading initiatives on the SEZ front. The Government of Employment provided is 1,93,743 persons. 2011-12 25,000.00 Karnataka has been instrumental in driving growth through SEZ's at various locations across the 2012-13 34,534.00 State. 2013-14 51,200.00 Total 1,48,763.00 Sector Specic SEZ for Pharma & Biotechnology at Hassan Sector Specic SEZ for Food Processing & Agro-based industries at Hassan All the matters pertaining to SEZs in the State are being co-ordinated by the Commissioner for Sector specic textile SEZ at Hassan Industrial Development and Director of Industries and Commerce. Visvesvaraya Trade IT SEZ at Mangalore Promotion Centre is extending secretarial services to Commissioner for Industries for Coastal SEZ at Mangalore establishment of SEZs in the State and also extending various incentives and concessions as per the State SEZ policy 2009. The proactive steps taken by the Government have resulted in encouraging the establishment of SEZ's in IT & ITES, Hardware, Apparel, Petrochemicals, etc, through both public / private 3.8 Foreign Direct Investment in Karnataka initiatives, with many more on the anvil at different locations in Bangalore, Mysore, Mangalore, Karnataka is a pioneer in introducing many reform initiatives adopted in India and has been Hassan and other places in Karnataka. highly proactive in attracting private investment. Lucrative policies incentivizing private Total number of approved SEZs - 60 nos. domestic and foreign investments are framed from time to time. These policies along with an Proposed investment is Rs. 37,178 crores investment friendly climate have helped the State attract large-scale private investment. Total employment is 11,64,645 persons. Karnataka stands 4th in attracting FDI in the country. The cumulative inows from April 2000 to Functional SEZs : 266 units March 2014 are US $ 12.67 billion (6% of total FDI inows in the country). The sectors receiving highest FDI inows are minerals, tourism, information, biotechnology, power, health, education, food processing and textiles.
39 40 Study on Strategies for Promotion of Exports from Karnataka
4.2.1 Agriculture & Allied Sector
State is a major producer of spices, owers, fruits and vegetables. The Government of Karnataka considers high growth of agriculture and allied sectors (including horticulture, sheries, animal husbandry, sericulture and food processing) as a means to accelerate the State’s GDP growth, CHAPTER 4 enable farmers to earn higher income and ensure food security. SECTORAL STRATEGIES FOR EXPORTS Vision of the State is ‘to position Karnataka in a sustained growth path in the eld of agricultural Government of India has come out with a strategy document for doubling the exports in the next and allied sectors through global technologies and innovative tools, by creating enabling three years covering the period from 2011-12 to 2013-14. Taking a clue from the strategy frameworks and state-of-art infrastructure facilities, thereby generating higher returns to document, an attempt has been made to evolve sectoral strategies for products which have export farming communities’. potential from Karnataka for boosting exports. Karnataka has taken a lead initiative in developing sustainable agri and allied sectors. For the rst time in India, the State Government presented a separate agri-budget thus placing special 4.1 Core Market Strategy thrust to the sector. The rst of its kind policy, ‘The Integrated Agribusiness Development The core of the market strategy for boosting exports needs to concentrate on the following: Policy-2011’ has been formulated to promote development of sustainable agriculture so as to a) Retain present market share in the existing export market; benet marginal land owners, farmers, SHGs, shermen and rural workforce. The policy aims to b) Move up the value chain in providing products in the existing export market improve the competitiveness of SMEs leading to better unit value realization, besides c) Open up new vistas, both in terms of markets and new products in these new markets. facilitating large investments and opening avenues for export markets.
4.2 Sector / Product Specic Strategy Though Karnataka is predominant for growing coffee, the State also has the potential for Sector / Product-wise strategy required to be evolved for major products exported from growing rubber as a plantation crop. The State also would like to support the rubber cultivation in Karnataka. The product / sector groups identied are : the areas which are conducive for rubber plantation.
Global Agri-Business Development Meet-2011 held in December 2011 is an important initiative a) Agriculture & Processed Food Products in developing sustainable agri & allied sectors in the State. Huge emphasis is laid on sustainable Coffee agricultural activity, enhanced productivity & better realization to farming community, Spices research, skill development and employment generation besides agro-exports of the State. Cashew Rose Onion Karnataka with its ten different agro-climatic zones and other bounteous natural advantages Floriculture offers immense opportunities for high growth in agriculture and allied sectors. It is imperative Gherkins that Karnataka takes advantage of the modern practices, technologies and develop strategies to b) Chemicals, Drugs & Pharma and Plastics. leverage the growing demand in both domestic and international markets. Thrust areas that c) Minerals require priority attention include improving production and productivity, reducing production d) Electrical & Electronics cost and wastage, increasing value addition, price stabilization, use of high-tech agricultural e) Software and other Services technologies, genetically modied varieties, micro propagation, micro irrigation / fertigation, f) Silk products. integrated nutrient management, organic farming, integrated pest management, protected g) Gems & Jewellery cultivation / greenhouse technology, post-harvest management, conservation & development of h) Textiles & Apparels native livestock, hygiene and modern sh handling facilities, modernization of slaughter i) Handicrafts & Leather Products houses, adoption of state-of-the-art food processing technologies, focusing on high unit value j) Engineering realization in export markets etc. k) Marine Products
41 42 Study on Strategies for Promotion of Exports from Karnataka
For boosting the agro exports, following are the strategies proposed: Food Processing SEZ at Hassan. a) Create brand image for unique agro food products of Karnataka and develop ‘key products’ Karnataka contributes 7% of Agricultural production of the country. to gain market dominance. Presence of 7 National level Research Institutes in Agriculture & Horticulture sectors. b) Create new markets and new product lines and develop alternate marketing channels Presence of 4 dedicated Food Parks and one Food Processing SEZ. including through PPP projects. Agro & Food Processing exports of Karnataka stood at Rs. 8315 crs in 2013-14. c) Encourage high realization and value added exports, meeting EU, Hazard Analysis Critical Agro and Processed Food Products are exported to USA, Dubai, Brazil, Taiwan, UK, Japan, Control Point (HACCP), Food & Drug Administration (FDA) and other international Denmark, Srilanka, Netherlands, Europe, Spain France. standards. (i) Coffee Products d) Special emphasis to make small scale agro based units in the State to remain competitive in India accounts for about 4.5% of World coffee production and provides employment to 6 lakh global markets. people. Among the coffee growing States, Karnataka accounts for 70% of country's total coffee production, followed by Kerala (22%) and Tamil Nadu (8%). The Government of Karnataka has promoted Karnataka State Agricultural Produce & Export Corporation Ltd. (KAPPEC) in the year 1986 under Companies Act 1956. KAPPEC was Coffee grown in India is entirely handpicked and completely sun-dried, and strict quality control established with the objective of developing and promoting production, processing and export measures are adopted for all varieties of coffee earmarked for exports. There are approximately of agricultural, horticultural and oricultural products. 13 regional variations of coffee grown across various locations in India. These include varieties from traditional coffee producing regions of Karnataka, Kerala & Tamil Nadu as well as newer The KAPPEC is involved in exporting grapes, pomegranate, mangoes, potato, onion, garlic, locations in Andhra Pradesh, Odisha & North East. turmeric, cauliower, watermelon and Niger seeds to different countries like Singapore, Sri Karnataka Exports Lanka, Malaysia, Australia, Netherlands, Mexico, Mauritius & Maldives. In addition, the Coffee production in India is dominated by Southern States with Karnataka leading with a 70% domestic business of fruits and vegetables has also been taken up. Further, KAPPEC is also share of the total production in the Country. Coffee production in Karnataka is concentrated in involved in the construction of integrated cold storage for helping farmers and exporters to Hassan, Chickmagalur, Kodagu & Mysore districts and covers approximately 1.26 lakh ha. export to different countries. In addition to the above, KAPPEC is also involved in of land. conducting workshops, seminars for increasing exports of agri and allied products. Coffee exports from Karnataka which stood at Rs. 3,173 crores in 2011-12 increased to The Integrated Agribusiness Development Policy-2011 envisages creation of a Special Rs. 3,598 crores by 2013-14. Purpose Vehicle - 'Karnataka Agri-Business Development Corporation’ for implementing the The destination countries of coffee exports from Karnataka include Italy, Germany, vision of agri business of the State. Belgium, etc.
More specically the strategy of Integrated approach would encompass production, storage, For improving the export of coffee, support is needed for upward movement in the value chain in cold chain and transport links across the State. The Schemes of the Ministry of Food Processing roasting, grinding, brewing, drying and packaging segment by subsidy support to prospective would be effectively utilized for promoting industries in this segment. Decentralization of the entrepreneurs. Good quality bagging and packaging material and aesthetic packaging will have schemes to the State will need strategies to be worked out by the States for creation of Food to be encouraged to place coffee at the best of places, where it can fetch better price and Mission Directorate and the supporting mechanism. recognition. Brand promotion / necessary linkages to other critical programmes like product development In case of exports, the supporting eco-system comprising Phyto Sanitation Certication, and research should be encouraged. Market study to explore new markets for sustaining the Organic Certication, Testing for meeting stringent requirements of pesticide free produce, existing market needs to be undertaken. packaging, labelling and branding will need to be created. Such support mechanisms will have denite impact on increased entry of Karnataka products in the global markets. Scheme support (ii) Spices Spices comprise Tamarind, Ginger, Pepper, Cardamom, Clove, Chilli, etc.. India is known as from the Ministry of Food Processing , Govt. of India and easing of process through State the home of spices and produces a wide variety of spices like black pepper, cardamom (small and Mission Directorate also are importent. large), ginger, garlic, turmeric, chilli, etc.. It is the largest producer, consumer and exporter of spices and spice products. India accounts for approximately 48% of the global export volume of spices.
43 44 Study on Strategies for Promotion of Exports from Karnataka
Owing to their geographic advantages most States and Union Territories in India are conducive APEDA and KAPPEC have been promoting the crop in Far East (Malaysia, Singapore, to the growth of suitable spices. Some of the prominent spice producing States in India include Indonesia and Brunei) and a few countries in west Asia such as Bahrain, Dubai. After the Kerala, Karnataka, Tamil Nadu, Uttar Pradesh, Uttaranchal, Andhra Pradesh, Maharashtra, etc. APEDA set up Agri Export Zone (AEZ) for rose onion in Karnataka, the exports of rose onion Some of the popular spices produced and exported from India include pepper, cardamom have shown signicant growth. (small), cardamom (large), ginger, turmeric, chilli, coriander, cumin, fennel, fenugreek, vanilla, garlic, mustard, nutmeg, mace, etc. Rose onions which are exclusively grown by the small and marginal farmers of the State are meant for exports and their local consumption is meager. Whenever there is a ban on the export Karnataka Exports of onions, this particular variety is also banned. This is causing great hardship to farmers who Karnataka plays a major role in spice production and exports. With over 64% of its geographic are growing rose onion. Hence, it is suggested that, at the time of introducing ban on onion area under agricultural cultivation, Karnataka is one of the leading producers of spices in India. exports, the rose onion may kindly be exempted. For spices like vanilla, cinnamon, tamarind, chilli and ginger, the State is a major contributor in total Indian production. The primary spice growing regions in the State include Mangalore and (v) Floriculture Karnataka is one of the leading exporter of oriculture from India. Export of oriculture from Madikeri. The State accounts for 8.6% of the National production and is one of the major Karnataka has been around Rs. 50 crore per annum. exporting States in the country. Spice exports from Karnataka grew from Rs. 700 crores in 2011- 12 to Rs. 1,150 crores in 2013-14. The setting up of international air cargo services and cold storage at the Bangalore Airport has resulted in boosting the oriculture sector. This Sector needs to be given further boost as it helps Encouraging setting up of spice parks to provide basic infrastructure facilities and to ensure to increase employment opportunities to the marginal farmers and workers from unorganized uninterrupted / adequate supply of spices needs to be given priority. Other facilities like sector. International Flower Auction Bangalore (IFAB) has also helped growth of oriculture warehousing, cleaning, grinding, packaging and testing lab will help in value addition and sector. generate sizeable volume for exports. Government has to encourage entrepreneurs to take up oricultural activity by introducing (iii) Cashew and Cashew Kernels subsidy scheme. Government also has to support infrastructure facility in terms of storage and After Kerala and Goa, Karnataka is the third largest producer of raw cashew nut in the Country. transportation to maintain freshness of the owers for exports. Cashew is primarily grown in Dakshina Kannada, Udupi, Kodagu and Chikkaballapura districts in the State. (vi) Gherkins India has today emerged as the origin of the nest gherkin cultivation, processing and exports to Cashew exports from Karnataka have grown from Rs. 882 crores in 2011-12 to Rs. 1,200 crores the ever-growing world requirement. in 2013-14. Gherkin cultivation, processing and exports in India dates back to the early 1990s with a modest The destination countries of cashew exports from Karnataka include US, UAE, Netherlands, etc. beginning in Karnataka State in South India. It later extended to the neighbouring States of Tamil Nadu and Andhra Pradesh and now has reached an impressive tonnage of 2,25,000 MTs, valued Cashew processing industry mainly depends on imported raw-material specially from South at around Rs. 700 crores. The export of processed gherkin is done by about 51 companies located Africa. There is need to encourage increase in the acreage to improve quality of raw-cashew and in Karnataka, Tamil Nadu and Andhra Pradesh. Gherkins are grown in contract with small and provision needs to be made for re-planting senile trees with new high-yield varieties. Waste marginal farmers. Currently there are more than one lakh small and marginal farmers who are lands can be utilized for cashew cultivation. engaged in the production of gherkins. The contracted farmers receive all inputs and technical support from the companies and are assured guaranteed buyback of produce at pre-declared Modernization of cashew processing units with the nancial support from the Government / prices. Initially processed gherkins were exported in bulk packing and since 2001 gherkins are nancial institutions need to be encouraged. being exported in "Ready-to-eat Jars".
(iv) Rose Onion Gherkin industry in India is very well established with exports reaching 2,25,000 MTs per Karnataka is the only State in India growing Rose Onion. Crop is grown in about 1100 acres annum. Export markets include all major countries like USA, France, Germany, Australia, mainly in Kolar, Tumkur, Hassan, Davanagere and Bagalkote districts. Bangalore rose onion Spain, South Korea, Canada, Japan, Belgium, Russia, China, Srilanka and Israel. exports accounts for a substantial share in the total exports of Karnataka. Gherkins are grown only in South India where the ideal soil type and the desirable temperatures
45 46 Study on Strategies for Promotion of Exports from Karnataka
of not less than 15oC and not more than 35oC are found mainly in Karnataka State, Tamil Nadu 4.2.2 Chemicals & Pharmaceuticals and Andhra Pradesh in South India. The components of chemical product include dyes, intermediates, pigments, organic & Gherkins are cultivated exclusively on "contract farming'' basis. The entire gamut of activities inorganic chemicals, agro chemicals, cosmetics, essential oils, etc.. Indian Pharmaceutical in the cultivation practices, followed by the farmers, processing standards, etc., are adhered to by Sector also exports substantial quantity of bulk drugs and formulations including herbal the Indian gherkin manufacturers to produce very high quality gherkins for the world markets. medicines.
Being an export oriented industry, both the Central & State Governments have extended Karnataka is one of the fastest growing States of the country in pharmaceutical sector and considerable support and encouragement to the gherkin industry. currently ranks fth in pharmaceutical exports. State contributes around 10% to the Indian pharmaceutical export revenues. Presently, over 230 Pharma and Biotech companies are housed A major initiative in the sector was the setting up of a separate "Agri Export Zone" for gherkins in in the State. A host of reputed and globally known pharmaceutical companies functioning in the Karnataka with a nancial implication of USD 2.33 millions. State have brought name and fame to Karnataka. Agricultural and Processed Food Products Export Development Authority (APEDA), under the Today, Karnataka is recognized world over for its manufacturing capabilities and acknowledged Ministry of Commerce and Industry, Government of India and Karnataka State Agricultural as a source of high quality and affordable generic medicines. State has several modern plants Produce Processing & Export Corporation Limited (KAPPEC) are the nodal agencies at the with international regulatory certications. Central and State levels respectively for implementing the concept of Agri Export Zone. The Indian Pharma Industry is expected to grow at a CAGR of 15-20% and achieve a turnover of At present in Karnataka, gherkins are being grown in an area of about 50,000 acres involving US$ 50 billion by 2020. The Active Pharmaceutical Ingredients (API) market is expanding at a about one lakh small & marginal farmers. rapid pace and formulation manufacturers have vast opportunities due to the upcoming patent Government needs to encourage setting up of more number of Agri Export Zones for Gherkins. cliff. Good packaging and branding for the purpose of marketing gherkins need to be supported Karnataka intends to maintain its leadership position in biopharmaceutical manufacturing through Government intervention. which accounts for 60% share of the total biotech sector in India.
At present, Karnataka has only a few dedicated bio-pharmaceutical companies manufacturing Monoclonal Antibodies (MAbs) which primarily include drugs targeted against cancer, as well as insulin and vaccines that are produced using cell culture. A strong strategy is necessary for Karnataka to maintain its leadership position in this highly specialized area. As biopharmaceutical products are set to capture a quarter of the global pharmaceutical market by 2016, the State needs to strengthen its prime position by taking proactive steps.
Internationally many top selling drugs are on the verge of losing patent protection in the near future. This will throw a huge potential for the State to enhance its manufacturing base.
The National Manufacturing Policy announced by Government of India on 4.11.2011 acknowledges that India’s large domestic market coupled with a strong engineering base has created indigenous expertise and cost effective manufacturing in pharmaceuticals apart from other sectors. The Policy emphasizes the necessity of formulating special programmes to consolidate strong industry base to retain the global leadership position.
Karnataka ranks 10th in the number of pharma manufacturing units in the country. The State has 221 formulation units and 74 bulk drug units, contributing 3% to the total manufacturing units in the country.
47 48 Karnataka generates US $ 1.46 billion or 8% on the country's pharma revenue and exports 40% Setting up of Centre of Excellence in the chemical cluster. Wherever it has already been set of its pharma produce.The exports of basic chemicals and pharmaceuticals in 2013-14 was Rs up, continuous upgradation of the facilities are required. 8,300 crores against Rs 7233 crores in 2012-13. USA, UK, Brazil, Argentina, China, Canada, i. By imparting trainers training. Egypt, Malaysia are the potential destinations for State pharma products. ii. The common facility for upgrading skill development especially for the already developed cluster facilities. The newly launched Karnataka Pharma Policy intends to provide ready-to-use infrastructure for establishing pharmaceutical enterprises on cluster concept through pharma parks at potential Enhancing market share of pharmaceutical products in regions locations of the State. The Policy covers major segments of pharma sector i.e., bulk drugs, drugs Efforts should be made to maintain and where possible enhance market share in markets intermediate, bio-pharmaceuticals and formulations. where India / Karnataka’s presence is already robust such as the North America, European Union and Africa. Secondly, even within groups of countries such as European Union and Africa, identify those countries where the rate of growth and market share have been substantially low. Therefore, focus must be provided to those countries. Latin America, Mexico and Brazil offer huge potential. Canada has seen a slow growth. Canada by itself is a generic producer. Therefore, special efforts need to be made to increase rate of growth of exports to Canada.
Special emphasis on CIS countries, South East Asia, Japan and countries like Egypt and other West Asian territories. In CIS among top twenty ve destinations (globally) only Ukraine and Russia have less than 10 % CAGR. They offer huge potential besides other CIS countries where substantial amount of work needs to be done to facilitate registration processes and Following strategies are required to boost this Sector: removal of non-tariff barriers. South East Asia is a relatively less explored market for Indian pharma. Japan is a fast ageing society. Japanese requirement for medicines are increasing Establish a centralized database of chemicals, their hazard, exposure scenario, risk rapidly. In order to reduce their cost of healthcare, Japanese have shown interest in accepting assessment and risk mitigation & management, etc. Indian generic pharma. Government can be the data holder which can be made available to public selectively creating transparency. In the recently concluded CEPA, Japan has agreed to offer National treatment to Indian This activity may be undertaken with the help of Chemexcil, Ministry of Environment & generic pharma. This is a huge opportunity waiting for us. Industry would have to Forests, various research institutes, and experts in this eld across the globe. aggressively pursue Japanese market. It is reported that generic pharma has about 12% share in the Japanese market. Today the SME sector especially in chemical industry needs to upgrade their knowledge, skill about the product, export and upcoming legislations. Herbals/traditional medicine is another signicant area requiring substantial policy Provide a training institute (graduate level) which will create interventions. Attention needs to be focused on twenty ve more important traditional i. Human resources, medicine products selected purely on the consideration of their acceptance in the export ii. Upgrade the skills of existing resources for better understanding in building national markets and then work around those products for pharmacopeia development, marketing competence of global level. tie-ups and regulatory facilitation. It is also important to Institutionalize cooperation iii. Provide platform for consultative support on various technical issues related to human agreements with territories where traditional medicine has strong roots such as South Asia, health and environment South East Asia (ASEAN) some CIS countries and some African countries. We also need to Create public awareness and thus create a platform for sound chemical management work towards getting traditional medicine practitioner access to these markets a s they will Expertise need to be developed in Product safety & Regulatory affairs. carry with them traditional medicine. Provide various short and long duration courses to employees of the chemical industry on chemical regulation, exports and imports. Chemical industry will be beneted by getting common testing facility for physical- chemical, toxicological, eco toxicological testing under one roof at reasonable costs.
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Suggested Initiatives Plastic Goods:
a. Target of 20% growth in European Union for which two important issues to be addressed Owing to its origins as a downstream product of the petrochemical industry, the plastic and include breaking the knowledge barrier and high bio equivalence cost for product plastic goods industry in India is oriented around the Petrochemical Sector in the Country. registration. Extensive training programmes, free/online training on EU regulations should Karnataka boasts of an established chemical and petrochemical sector and hence has a role to be offered to Indian companies aggressively. play in the plastic goods manufacturing and exports sector of the country. The plastic goods industry in the State is concentrated in and around Mangalore and Bangalore. b. The need for special nancial package for Pharma Sector has been highlighted in various foras. Pharma sector is a capital intensive sector. Besides R&D expenditure, regulatory Plastic goods exports from Karnataka stood at Rs. 178 crores in 2007-08 and witnessed an requirements require large funds. Setting up of large number of Bioequivalence centres increase of 239% to Rs. 604 crores in 2011-12. In 2013-14, plastic exports stood at Rs 700 crores. through soft funding would lower the costs of Bioequivalence tests and more registrations/exports can happen from our country. All quality investments should be treated The destination countries of plastic goods exports from Karnataka include China, US, UAE on par with R&D to provide incentive to the industry as cost of quality investments is very and UK, etc.. high in EU. It would be hence be appropriate to maintain the leadership of Indian pharma 4.2.3 Minerals research through a government supported R&D programme to boost innovation and enterprise especially in the MSME sector. Karnataka is a major producer of Gold, Felsite, Iron ore, Chromites, Manganese ore, limestone c. The way ahead is to attract more contract manufacturing business, developing capability in and Dunite in the country which account for approximately 98.92% of the total value of mineral existing clusters and providing concessional nance for large scale advanced testing centres, production in the State. The mineral resources are concentrated in Bellary, Chitradurga and stability testing centres, efuent treatment infrastructure, bioequivalence centres, etc. to Tumkur Districts. enable the individual entrepreneur build relevant manufacturing capacities and success stories in CRAMS space. In 2010 a blanket ban was imposed on the mining and export of certain minerals. As a result, the State's iron ore and mineral exports which were Rs. 1,134 crores in 2011-12 witnessed a drop of d. Herbal industrial parks in line with model concept of JNPC should be developed where on 13% to Rs. 739 crores in 2013-14. The increase in illegal mining and the intervention from the National priority 25 herbals are processed into GMP facilities and infrastructure for High Court / Supreme Court, the export of minerals specially, iron ore has been adversely necessary conversion into end use formulations is provided. Most herbal dealers do not enjoy affected from 2011-12. this infrastructure and the value addition is unnecessarily lost. The major destination countries of iron ore and mineral exports from Karnataka include Saudi e. It is imperative to have an aggressive approach that a Brand India / Karnataka should be Arabia, UAE, Nepal, Bahrain, China, Japan, Netherlands, Korea, etc. evolved and campaigned. A comprehensive proposal for launching a Brand India / Karnataka Pharma globally has been prepared. Initially, it was proposed to be funded through a partnership between MAI, Indian industry and IBEF. However, it is felt that while involvement of industry is critical and IBEF could be used to develop the initiative, the scale of operations for a proper brand creation for next ve years would require substantial funding. Thus the source of funding needs to be under a special scheme during the XII Plan rather than be dependent on the limited resources under MAI.
Policy initiatives as above would require total commitment by the industry to address strict compliance with WHO GMP requirement as also adhering to quality parameters at all stages of manufacturing. Government can only create an environment for faster growth. However, the real implementation and commitment has to come from the industry.
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4.2.4 Electrical and Electronics combination of hardware, software and system integration skills. This niche area is called intelligent manufacturing. These are usually high tech products which provide high value Electronic Goods Sector is characterized by large variety of products. Exports of electronics addition but low volumes in highly quality conscious capital goods sector. Karnataka has a hardware can increase faster with the introduction of high value items design and system competitive advantage in this sector where a large proportion of value addition is through integration. The major destination countries of electronic goods from Karnataka are USA, UK, software and system integration. Such electronic items are widely used as part of telecom and Taiwan, Singapore, France .Strategy required to boost exports of electronic items are as follow: power equipment. Establishing joint ventures with Chinese companies like Huawei, Zte etc. which have manufacturing strengths and substantial market share in third world countries, can Setting up Manufacturing Clusters or Industrial Parks help in increasing high tech exports in the short term to Africa and the Middle East. Such joint Electronic goods that are manufactured for exports require infrastructure facilities, a large ventures can either be independent or part of industrial parks set up with Chinese investment as number of imported components and skilled labour. Mass production of these items can be proposed by China during the visit of the Chinese Premier. competitive if components are available on time and the ecosystem ensures that transaction costs are low and inventory carrying costs are borne by the component manufacturers. The clusters Reform by Simplication of Customs Procedures should also have employee hostels and other facilities like clinics and sports facilities to enable The Industry is of the view that customs procedures are cumbersome and need simplication to employees to stay on site, be more productive and put in extra time if required by production render them friendly for exporters. The customs procedures should move from a refund regime schedules. In addition, logistics, warehousing and testing facilities need to be provided on site. to a self-declaratory regime on similar lines as excise duties for export goods. This will reduce a Each such cluster needs to be anchored by one or more dominant international brands. To attract major non-tariff disability currently faced by exporters of electronic goods. such mother units for manufacture of computers, tablets, cell phones, medical electronic equipments, telecom equipment etc industrial parks need to be promoted with the ‘Made in India R&D support for generating IPRs and development of high technology products / Karnataka’ tag. Each line of mobile phone capacity that is added results in an outow of US$ 15 on account of royalty payments for IPRs held abroad. Viable manufacture and export of Diversication by Promoting Repair / Reconditioning / Refurbishment of value added electronic goods require domestic companies to possess their own IPRs for such Electronic Goods products. Government may support research and development registration to IPRs through The American market for repair/reconditioning/refurbishing of electronic goods is estimated to suitable programmes for boosting innovation in the industry. be US$ 10 billion annually.The EU market size is of the same order. The major countries servicing the American market are China, Vietnam, Philippines & Thailand. India has a few Venture capital funds for supporting innovation in electronics and semi-conductors would be large emerging companies which are beginning to provide these services but the combined useful. Government of Karnataka has already initiated Rs. 100 crores venture capital fund for turnover is of the order of just US $ 5 million. Indian workers are recognized as having better semiconductors with a budgetary support of Rs. 26 crores. This may be extended to create a fund diagnostic skills and thus enjoy a core competence in the area of repair and re-export and this for nanotechnology and electronics. should be used as a major opportunity. Further, due to excellence in the software sector, Indian industry has very good brand equity in the US. An export volume of US$ 1 billion can be Nurturing Skill Development targetted in the US market over the next three years (creating 5 lakh jobs) by merely simplifying For doubling exports of the electrical & electronics goods, the manufacturing base of the the procedure for one-to-one co-relation of units like laptops, mobile phones, mother boards, industry will have to increase manifold. However the shortage of skilled workers is likely to memory cards, etc. (both having unique identication numbers and others) at the time of import impact this unless urgent efforts are made to augment skill development for this sector. The and re-export. Since repair and refurbishment service are related to warranties/ guarantees and capacity of ITIs for producing skilled workers suitable for employment in the electronic require time-bound delivery, the maximum time for inward and outward custom clearance needs hardware sector needs to be increased. In the short run, the scheme of adoption of ITIs by private to be specied (say 48 hours). Units under this category may be asked to provide monthly companies needs to be made more focussed. The challenge of making available adequate and declarations of imported and exported quantities for each type of hardware to customs subject to better skilled manpower to Indian companies to enable them to make products for the export periodic audit and deterrent penal provisions for wrong declarations. Also the maximum time for market needs to be tackled urgently. export of any imported item after repair or being scrapped needs to be xed as six months. Setting up a Semiconductor Wafer Fabrication Facility Promoting ‘Intelligent Manufacturing’ This has a great potential of expanding downstream manufacturing related to assembly, testing, In the evolution stage advanced technology products require huge engineering support and a packaging and marketing of products that use semi-conductor chips. This decision needs to be
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expedited as a fabrication facility will act as a magnet for attracting a vast array of export- Tourism : oriented units. Once the location of this facility is decided, an industrial park / SEZ / cluster / Tourism is one of the prime sectors helping the country to earn foreign exchange by attracting nano park with state-of-the-art infrastructure needs to be established for downstream units. foreign tourists. Creation of electronic cluster through CLIK will possibly enable an eco-system for attracting reputed original equipment manufacturing units to set up base for exports of electronic The World Travel and Tourism Council 2010 report ranked India's growth forecast in the tourism components specially to Asia and Africa. sector amongst the top ve in the world. Having attracted cumulative FDI inows of USD 3,112.67 million in the tourism and hospitality sectors between April, 2000 and November, Infrastructure Improvement 2011, the country's travel and tourism industry is forecasted to grow at a rate of 7.6% in 2012. A major constraint faced by electronic goods exporters is the difculty in getting containers for transporting goods. This results in delays for movement of containers from ICDs / CFS to the Karnataka ranks fourth among all Indian States as a popular tourist destination. ports for shipment. Expansion of capacity for containers on trunk routes will enable overcome the constraints. If volumes are feasible, then, a CFS exclusively for electronic goods and The tourist prole of Karnataka comprises of religious tourism (41%), heritage tourism (34%), components at Bangalore, with required facilities, may serve the purpose. eco-tourism, leisure tourism and coastal tourism each attracts 8% of all tourists visiting Karnataka. Adventure tourism draws 6%, wellness tourism accounts for 4% while medical Better coordination between the Container Corporation of India (CCI), the Railways and the port tourism attracts 1% of tourists. authorities will improve the quality of services resulting in minimizing transport delays. The hospitality sector added over 3,000 quality rooms in the State in the last three years, with 4.2.5 Software & Other Services 1,200 more rooms to be completed by 2013. With Average Room Rate exceeding USD 187.5 per night, the highest nationwide, Karnataka's hotel industry commands India's premier and luxury Software exports contributes about 21.4% to State’s GSDP. Bangalore is the magnet for hotel sectors. investors in IT & Software Sector and is the fourth best technology hub in the world after Silicon Valley. Almost all the Fortune 500 companies have their operations outsourced in Bangalore. Foreign Direct Investment (FDI) of 100% is permitted on automatic route in the hospitality and Karnataka is also encouraging investment in IT / ITeS related industries in second tier-II cities tourism sectors and India has attracted FDI of USD 3.23 billion in the hotel and tourism sectors viz., Mysore, Mangalore and Hubli. Due to availability of large technical pool, the State has very between April, 2000 and January, 2012, comprising 2.02% of total FDI inows in the country. good potential for increasing the exports of software.
Education : Some noteworthy milestones of Karnataka as a tourist destination include: Karnataka is in the forefront of Educational endowments be it institutional or human resources Bangalore being rated third on the The Lonely Planet "Best City to Travel in 2012" list and has signicant achievements to its credits. With 44 Universities and about 5000 higher Conde Nast Traveller ranking Karnataka fourth on the "Where You Should Go in 2011" list educational institutions and more than 100 R&D institutions in the State, Karnataka is rightly Mysore rated the "4th Best Place to Travel in 2010" by The New York Times described as the Knowledge Hub of India and a leader of Knowledge Economy. Important MSN Green ranking Coorg among India's Top 8 Eco-destinations industrial / service sectors like, IT, BT, Nano, manufacturing, medical and animation are Trip Advisor ranking Hampi and Bangalore among the 25 Top Holiday Destinations in ourishing in the State, reaping greater benets from quality output from the professional Asia 2010. colleges, Universities and R&D institutions. The term 'Bangalored' indicates the brand name of The Golden Chariot rated by Vanity Fair as "one of the top 7 luxury trains in the world" Karnataka owing to its gravitational pull for the best of the talent in the country, besides the generation of brainy and competent human resources within the State. It is imperative that Government of Karnataka attracts investment in potential tourism related projects viz., amusement parks, adventure sports complexes, water sports, corporate hospitality Karnataka houses 1407 industrial training institutes with an enrollment of 1,25,328 trainees, 291 centres, golf courses, eco-lodges and oatels, cruise ship terminals, etc. in various arms of polytechnic with an intake of 69,624 students and 195 engineering colleges with an intake of tourism including Health & Wellness Tourism, Culture Tourism, Recreational Tourism and 56,235 student intake capacity. In addition, Bangalore has prestigious institutions like Indian Hospitality and Coastal Tourism. Institute of Management and Indian Institute of Science which is globally known for excellent quality, management and technical education respectively. The State is already attracting students across the globe for technical and management education.
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4.2.6 Silk Products Credit Availability The Gems & Jewellery industry is an import based industry which requires foreign currency i.e Karnataka is the largest producer and exporter of silk & silk products in India. The State accounts US Dollars/Euro. To ensure easy and continuous availability of roughs from overseas mining for 65% of total raw-silk production of the country (7,336 MT 2010-11) and employs companies and for its marketing and infrastructure requirements, there is a need to ensure bank approximately 432,000 people in the State. Mysore, Mandya, Hassan, Chamarajanagar and nance in foreign currency at international interest rates and costs. It has been reported by the Bangalore are the primary silk producing districts and have an aggregate capacity of 8,241 MT. Industry that current rates being charged are much higher than the international rates putting them at a disadvantage. The matter may be taken up with Reserve Bank of India for creation of a The State's silk and silk product exports constitute 24% of the total silk exports from India. Silk special fund for meeting the requirements of exporters of Gems & Jewellery and hedging risks of product exports from Karnataka stood at Rs. 673 crores in 2011-12, however, the same uctuations to some extent. witnessed a decline and stood at Rs. 650 crores in 2013-14.
The destination countries of silk product exports from Karnataka include UK, US, Hongkong, Consignment import of rough diamonds UAE, etc.. It is necessary to allow consignment import of rough diamonds for conducting the following operations/activities: The silk industry In Karnataka in Powerloom Sector as well as export oriented units in organized Assortment & re-export of the same; sector are importing silk from China for production activity due to its good quality and Purchase or return; competitive rates. Sale of rough diamonds, rough coloured gemstones, cut & polished diamonds and coloured gemstones by a foreign miner without IEC number; The Government should take steps to encourage more and more farmers to produce quality Establishment of a diamond sale operation in India. cocoon suitable for weaving on powerloom / high-speed modern looms. Under this system both the cut and polished and rough diamonds are imported on consignment 4.2.7 Gems & Jewellery basis from across the world and are assorted in different lots according to the cut & polished size and displayed for auction. After the bidding, diamonds are taken by the bidder and the unsold India contributes 16.27% share in total world exports. diamonds are re-exported back. India holds world's most competitive Gems & Jewellery market due to its low cost production and availability of skilled labour. Skill Development India has a large pool of skilled artisans with vast traditional knowledge and expertise in In order to address the issue of skill development of manpower, the Government of India has a jewellery making. scheme implemented by the National Skill Development Corporation (NSDC). The newly Gems & Jewellery Design Centre at Bangalore. established Karnataka Skill Development Commission may be provided adequate support to Gems & Jewellery contributes 22% to the State commodity exports. The exports stood at strengthen the infrastructure of training institutes and upgrade training methodology in Rs 24,175 crores in 2013-14 against Rs 24,482 crores in 2012-13. consultation with the Gems & Jewellery industry / association. Gems & Jewellery are exported to Singapore, Dubai, Sharja, Kuwait, USA, UK, etc. Specialized training institute on similar lines as the one at Surat and another at Jaipur may go a Sourcing and Supply of Rough Diamonds / Coloured Gemstones long way in meeting the requirements of skill upgradation among the local industry. Rough diamonds are mostly imported. They are imported for polishing and re-export. Gems and Jewellery are also in the basket of export goods and need imported rough diamonds. Facilitation The Government of Karnataka has supported JSS initiative of setting up a design and training mechanism for sourcing of rough diamonds for exporters will be useful. Rough Diamonds are facility at Bangalore. An assessment of the performance will be useful in upgrading this facility. being sourced from Russia, Namibia and Zimbabwe and bilateral tie-ups with diamond mining companies will possibly ensure continuous supply. The World’s Diamond Exchange at Antwerp, Belgium and the way business is transacted there need to be exposed to emerging jewellery manufacturers and exporters as a part of capacity building. The matter may be discussed by the trade with the Belgium Trade Promotion ofce at Bangalore. VTPC may facilitate such interactions of the trade with the Trade Promotion Ofces.
57 58 Study on Strategies for Promotion of Exports from Karnataka
4.2.9 Handicrafts (including leather) Karnataka Exports Karnataka has traditionally been a hub for engineering service industries in the country. Many Karnataka's historical heritage has contributed signicantly to the development of indigenous PSUs such as Bharat Electronics Ltd., Bharat Earth Movers, Hindustan Machine Tools (HMT), handicrafts across the State. Karnataka today is well known for its Mysore silk, metal ware, Bharat Heavy Electricals as wel as large MNCs such as SKF, Ingersoll Rand, Waltex, Durco, Mysore paintings, ivory carving, stone carving, sandalwood craft, doll making, etc.. Wrigten, Goulds, Moog Control, Yuken have manufacturing facilities in the State. Of the same, a number of exporters are based in Bangalore, Hubli, Mysore, Belgaum, Mangalore, Handicraft exports from Karnataka contribute approximately 3% to India's handicraft exports. Shimoga, etc. The export of handicrafts, which stood at Rs. 267 crores in 2011-12 increased to Rs. 516 crores in 2013-14. Engineering exports from Karnataka include machine tools, industrial machinery, small & cutting tools, castings, automotive components, electrodes, welding equipments, construction The major destination countries for handicraft exports from Karnataka include US, UK, and earthmoving equipments, helicopter spares, etc. Engineering exports in 2011-12 stood at Rs. Australia, etc. 8,263 crores and increased to Rs. 17,978 crores in 2013-14. Engineering products are exported to Leather Products Germany, USA, Thailand, Taiwan, Mexico, Japan etc. The leather industry in Karnataka is primarily concentrated in and around Bangalore. The sector Karnataka is one of the leading States in India in the manufacture & exports of engineering is dominated by small and micro units and is focussed towards leather footwear and garments. goods. Karnataka's Aerospace Policy 2013-2023 has a mission to attract investments of Rs. The State exports contribute to less than 2% of the country's total leather product exports. 60000 crore over a period of ten years. The Policy also aims at enhancing the share of industry in Leather product exports from Karnataka stood at Rs. 320 crores in 2011-12 and increased to Rs. the State GDP from 28% to 32%. 450 crores in 2013-14. The destination countries for leather product exports from Karnataka Some of the strategies in promoting the export of engineering sector include include Australia, Belgium, Canada, Italy, Germany, China etc. the following:
Formulate a Technology Upgradation Fund Scheme for the MSME Engineering Industry
The main constraint inhibiting the growth of engineering sector is attributed to severe technological obsolescence and lack of economies of scale. Major chunk of engineering exports comes from the MSME sector which is exporting low value added products. There is need to 4.2.10 Engineering concentrate on exports of higher value-added items so that the contribution of value added items in engineering exports increases from current level to about 20% to 25% in the near future. Engineering goods comprise aerospace, automobile, precision tools, aluminum sheets, non- ferrous metal, machine tools, machinery & instruments, transport equipments, residual For this purpose it is important for the MSME sector to upgrade its technology to enable it to engineering items, iron steel bar / rod etc. move up the value chain. Thus, a Technological Upgradation Scheme for the Engineering Industry catering to the Low Value Added MSME sector needs to be formulated to provide The engineering industry is the largest segment of the overall Indian industry. The engineering the necessary policy wherewithal for modernization of the MSME units to match global industry can be divided into electrical and non-electrical segments. The electrical segment standards. depends upon the investments in power industry, while the prospects of the non-electrical segment are driven by industrial investment. It is suggested that a modernization fund be created in a phased manner with contributions from both industry and Government for supporting modernization initiatives in the engineering India continues to be one of the fastest growing exporters of engineering goods, growing at a sector. CAGR of 30.1%, trailing only China among major engineering exporters, but well above the global engineering average export growth of 13%. Signicantly, the country's engineering export growth rate has been higher than its overall exports. In 2012-13, the country's engineering exports stood at Rs. 3.08 lakh crores and increased to Rs. 3.76 lakh crores, indicating a growth of 21.7% in 2013-14.
59 60 Study on Strategies for Promotion of Exports from Karnataka
Skill Development Fund for Engineering Industry Karnataka has a coastline of approximately 300 kms. (Mangalore to Karwar) and has an established marine products industry. The industry is primarily concentrated in Dakshina At present Engineering industry and particularly manufacturer-exporters in engineering sector Kannada and Udupi districts namely in Mangalore, Malpe and Gangolli. The State exports of are facing serious problem of skilled manpower. The plant and machinery are becoming more marine products surged from Rs. 605 crores in 2011-12, to Rs. 1,067 crores in 2013-14. The and more high-tech and the required level of skill are lacking. major category of marine products being exported from Karnataka includes shrimps, frozen Supporting quality institutions such as GTTC, NITIE, CMTI, etc. to undertake skill shrimp, prawns, cuttle sh, squid dried, etc. The following strategies need to be adopted for development programmes through short term and medium term industries sponsored courses encouraging growth of exports of marine products : will be useful in bridging the gap. Strengthening ITIs and these institutions to acquire modern Promote export of live items like crabs, lobsters and chilled items like tuna by increasing plant & machinery for training will be another step for training and upgradation of skills for the their production as these items have good demand. engineering industry. Promote value addition of marine products Promote market diversication to increase the exports to new blocks like east European A Skill Development Fund with contribution from Government and sponsor industries may be countries, Africa. considered for this purpose. Projects approved in the large and mega sectors may be requested to Promote product diversication by introduction of new sh species for aquaculture and contribute to the fund as a part of CSR activity. This would enable them to build capacities mericulture in India. among potential workers and source them for employment. Encourage setting up of cold chains, quality testing labs, transportation & preservation and processing infrastructure near the centre of production to reduce harvest & post The Karnataka Skill Development Corporation needs to be strengthened to play a greater role in harvest losses. development of vocational skills. Promote R&D for export oriented aquaculture and by funding Agriculture Universities, ICAR, MPEDA, etc. Bring more area under aquaculture through State Fisheries and Revenue Department to improve and streamline the process of leasing land and oceanic areas.
The destination countries of marine product exports from Karnataka include China, Japan, US, countries in the Middle East, etc.
4.2.11 Marine Products / Fisheries
During 2011-12, marine product export earnings have crossed USD 3.5 billion. Exports aggregated to 862021 tonnes, valued at Rs. 16597.23 crores and USD 3508.45 million. Compared to the previous year, seafood exports recorded a growth of 6.02% in quantity, 28.65% in rupee and 22.81% in US$ earnings respectively.
The increased production of Vannamei shrimp, increased productivity of Black tiger shrimp and better price realization of major items like Shrimp, Squid and Cuttlesh helped us to gain such a 4.2.12 Handicrafts and Others higher export turnover. It includes Handicrafts, Leather, Sports Goods, etc. Overall exports of these goods from Karnataka stood at Rs. 4,819 crores in 2011-12 and increased to Rs. 5,565 crores in 2013-14.
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100 in and and t the the CI h an to e a 64 The policy has been drafted through an extensive consultation process with all the stake holders Government desires to achieve these objectives through the following policy measures: i.e. Trade Bodies / Associations, related Government Departments and deliberations on various components of the policy such as Infrastructure, facilitation mechanism, HRD, incentives and i) Creation of quality infrastructure with comprehensive facilities. concessions, MSEM development, focused sector etc and Government appreciate the valuable ii) Human resource development through capacity building and skill up gradation. suggestions of the Karnataka Manufacturing Taskforce (MTF) and all other stake holders. The iii) Simplication of facilitation mechanism and procedural reforms. views and suggestions offered by all the stakeholders have been incorporated suitably in the iv) Thrust for Hyderabad Karnataka area. policy with the objective of making Karnataka a preferred destination for Industry. v) Special thrust for encouraging SC.ST entrepreneurs, Women entrepreneurs, Non Resident Kannadigas (NRKs) etc. In the light of the above, a decision has been taken by the Government to formulate and adopt a vi) Encouragement for export promotion. New Industrial Policy for the period 2014-19. vii) Support for R&D and Digital Direct Manufacturing. viii) Encouragement for Anchor Industries. Hence the following order: ix) Attractive incentives and concessions. Government Order No: CI 58 SPI 2013, Bangalore, Dated: 01.10.2014 In the circumstances explained in the preamble, Government is pleased to announce the The above industrial policy and package of incentives and concessions shall come in to effect Karnataka Industrial Policy 2014-19 as detailed in Annexe to this order supported by the from 01.10.2014 and will be valid for a period of ve years or till a new policy is announced. following annexures: This order issues with the concurrence of Finance Department vide U.O. Note FD/726/Exp- Annexure 1 - List of Service Enterprises eligible for package of Incentives and Concessions 1/2014 dated 16.07.2014 and 06.08.2014, Water Resources Department vide U.O. Note IDD / 28/I-TC/2014 dated 05.06.2014, Labour Department received vide Ka E/170/LET/2014 Annexure 2 - List of Industrial Activities / Enterprises not eligible for Incentives dated.29.04.2014, Forest Ecology and Environment Department vide letter dated 08.04.14, and Concessions Energy Department vide their UO note EN2/VSC/2014/P1 dated 30.06.2014 and dated 31.07.2014, Planning Department vide their UO Note PD/26/FRO/2014 dated 16.06.2014, Annexure 3A - Terms and Conditions for extending Incentives and Concessions Urban Development Department received vide UDD/45/UMS/2014 dated 21.07.2014, Revenue Department vide UO Note No:RD/230/LGB/2014 dated.21.07.2014 and UO Note Annexure 3B - Terms and Conditions for Private Industrial Areas / Estates No: KA E/25/MU NO MU/2014 dated.22.07.2014, Department of Women and Child Welfare received vide UO Note No.WCD/4397/PRS/2014 dated.21.07.2014, Rural Development and Annexure 4 - Initiative for Export Promotion Panchayath Raj vide UO Note: KSRLPS/Kai Nee 2014-19/2014-15 dated 23.07.2014 and Cabinet approval dated 11.09.2014. Annexure 5 - Denitions
The vision of Karnataka Industrial Policy 2014-19 is to build a prosperous Karnataka
through inclusive, sustainable and balanced industrial development thereby creating By Order and in the name of the large employment opportunities. The objectives of the policy are as follows: Governor of Karnataka,
i) To maintain an industrial growth rate of 12% per annum. ii) To enhance the contribution of manufacturing sector to the State (K. Ratna Prabha, IAS) Additional Chief Secretary to Government, iii) GDP from present level of 16.87% to 020% by end of policy period Commerce & Industries Department iv) To attract investment of `5.00 lakh crore v) To create employment opportunities for 15 lakh persons vi) To create an environment to enhance ease of doing business in the State.
65 66 Study on Strategies for Promotion of Exports from Karnataka
A. Export Promotion Measures 4. Development of infrastructure for specic sectors: a. Agro & Food Processing Sector: 1. Creating Export Infrastructure: Food parks / Agri special zones / Agri Logistic Parks / Corridors would be encouraged for Provide Viability Gap Funding (VGF) for projects to be implemented on PPP mode. establishment at different locations across the State. These parks will have all the required Government Departments / Organisations which are mandated for development of infrastructure facilities like pre-harvest & post-harvest technology, cold chain, infrastructure are to reserve certain percentage of their annual budget to support critical temperature controlled warehouses and refrigerated transport / reefer trucks to minimize infrastructure to encourage exports. the loss in storage and transit. Private participation would be encouraged for the development of Inland Container Depots, It is proposed to support the establishment of better connectivity from fruits and Container Freight Stations, Logistics Parks, pre & post harvest technology centres, ware vegetables growing areas to ports and to the National / State highways to facilitate easy housing and other infrastructure facilities through PPP mode. movement of goods. Trade bodies and industry associations would be encouraged to promote development of Market intelligence reports would be provided for dissemination of information to infrastructure, R&D Centre, Training Centre and Testing Centre to augment the development farmers on a real time basis. and growth of exports. Modern packaging technology would be encouraged to reduce the packaging cost. The Private participation, Export Promotion Councils, Trade bodies/Industry Associations State would support the establishment of a branch of Indian Institute of Packaging in this would be encouraged to create warehousing facilities overseas for exporters near transit regard. ports to help trans-shipment of goods on main line vessels. As the State is known for exports in gherkins, oriculture and rose onions & necessary Existing sea ports would be strengthened to enhance the capacity for facilitating exports support will be provided to this sector for quality production for exports. Development of minor ports would taken up on top priority for creating capacities for Establishment of Spice Park at potential locations would be supported with technical / handling varieties of commodities for imports and exports nancial support of Spice Board, Govt. of India. The Bangalore Air Cargo Complex and Mangalore Air Cargo Complex would be supported to strengthen and upgrade facilities to meet the demand exporters. b. Textiles &Readymade Garments Sector: The rail network in Karnataka would be strengthened to facilitate speedy movement of goods State has announced a separate Textiles Policy 2013. to ports. The State would prevail upon the Central Government for new railway projects on PPP basis c. Chemical Industry Sector: for increased connectivity between major business centres of the States to ports. Establishment of Warehouse facilities for storage of hazardous chemicals and testing facilities would be encouraged at Bangalore and Mangalore. 2. Encouraging SEZs: Development of SEZs both multi product and sector specic, would be encouraged in the d. Pharmaceuticals Sector: State by dovetailing the provisions available in the Central / State SEZ Policy. Establishment of separate Pharma Zone would be encouraged at potential places with the infrastructure facilities and common efuent treatment plant / common users facilities for 3. Encouraging Development of ICDs & CFSs: development of pharma sector in the State and to promote exports. Existing ICDs and CFSs would be supported for upgradation with necessary infrastructure Pharma SEZ located at Hassan and Yadgir / Bidar would be strengthened/ promoted facilities to ensure smooth exports. on priority. ICDs / CFSs and logistic parks would be developed in the clusters and in the major industrial Establishment of separate storage facilities and cold chain facilities would be encouraged areas of potential districts to facilitate exports. for handling pharma products at the Ports. Establishment of ICDs and CFSs would be encouraged on PPP mode with Viability Gap Fund. e. Engineering Sector (Automobile, aerospace & Precision Tools): CFS facilities would be encouraged at potential locations to help exporters especially in Establishment of R & D testing facilities would be encouraged at Bangalore, Mysore, MSME segments, which generally ship small quantities as they cannot utilize a full container Hubli, Dharwad and Belgaum. load. Free Trade Warehousing Zone (FTWZ) for the engineering sector including Automobile, aerospace & Precision Tools would be encouraged through PPP mode.
67 68 Study on Strategies for Promotion of Exports from Karnataka
f. Electronics Sector: 5. Focus on MSME Sector: State has announced a separate Karnataka ESDM policy 2013. Exports from the MSME sector over a period of time have acquired great signicance in India’s foreign trade. This sector accounts for over 40 per cent of the total exports from g. Gems & Jewellery Sector: the Country. As the State is a leading hub for the export of gems and jewellery articles, the State would The State would lay high priority to MSME sector for venturing into export activities and extend support to artisan centric locations, with design and development facilities for also enhance their competitiveness in international trade. manufacture of innovative articles to explore the overseas market. Facilities for testing and capacity building would be created at potential locations. 6. Other Strategies proposed for the development and growth of Exports: The State would encourage the establishment of Gems and Jewellery Park in Bangalore. Trade Information Centres / Kiosks would be established at divisional headquarters with participation of leading industry associations and trade bodies. h. Plastic Sector : Certain industries are declared as Publicity Utility Services (PUS) under the Industrial Establishment of Plastic Parks in Bangalore, Dharwad and other potential locations Disputes Act, 1947 Act by the Government. In case of strike or lockout in respect of would be supported. industries declared as Essential Services, prior notice is compulsory either by employees or Facilities such as design and prototyping centres, testing and tool room facilities etc., by management, respectively. In all, 39 industries are declared as PUS and included in the required by the industry would be supported. First Schedule to the Act. Hence, EOUs are to be declared as PUS to have a conducive CIPET would be encouraged to set up its Branch Ofce in Bangalore. environment for exporters. Exporters with good track record will be issued the Green Card to enable smooth movement i. Leather Sector: of goods without any delay at check posts / verication of documents. State will support mega leather park under Mega Leather Cluster Scheme of Government Banks will be prevailed upon to issue Gold Cards for exporters with proven transaction of India. record. Gold Card will enable the exporters to avail nancial assistance on easy terms and fast track mode. j. Handicrafts Sector: The State will support studies and surveys for identifying potential export markets for State’s R & D Centres and training facilities would be supported for development of handicraft products. Market research and entry strategies through various organizations would be products at specic locations. encouraged by way of scal support. Creation of Crafts Parks, Agarbathi Park etc., and improved infrastructure facilities Study tours, business delegation to foreign countries and participation in International Trade would be encouraged in the existing Crafts Clusters. Fairs to explore the potential markets would be supported by dovetailing MDA and other Facilitation of Crafts Tourism by linking Craft Clusters and Craft Parks to Tourism spots similar schemes of the State. will be supported. The State will continue to confer the Annual Export Awards for export excellence in the State Artisans are encouraged and assisted with nancial support to participate in the craft and encourage existing and new exporters. melas, trade fairs / exhibitions to sell their products directly to the consumers. Trade Point, as an extended wing of World Trade Point Federation, Geneva which has been Support would be extended to associations, trade bodies / department / agencies to established at VTPC, would continue to provide the commercial services for exporters with a organize handicraft exhibitions in the potential cities for network development and to special focus on SMEs. explore overseas market for their products. A WTO Relay & IPR Cell would be strengthened to enhance capabilities of MSME sector VTPC will work with artisans to improve quality so as to market their products to large and other stakeholders in order to keep them updated on the happenings across the globe. retail entities for global sourcing operations. The International Desk-Liaison Ofce would be strengthened for facilitating in establishment of International Desks in identied countries and that would function as an k. Marine Products: interface for the promotion of trade and investment. Development of infrastructure like cold storage, warehousing, refer vans and upgradation of shing harbours would be encouraged. Export and quality management programs would be supported for the associations.
69 70 Study on Strategies for Promotion of Exports from Karnataka
B. Incentives and Concessions: 6. Support for Establishment of CFSs and other export infrastructure: Financial support towards establishment of Container Freight Stations (CFSs) and other export As a commitment to provide a level playing environment and competitive edge to exporters, the infrastructure like logistic park, pre harvest and post harvest technology centres at the potential State would endeavour to provide attractive package of incentives and concessions. The package locations in the State would be provided as Viability Gap Fund. This would entail 25 % of the of incentives and concessions for Export promotion is detailed below: cost of the project subject to a ceiling of Rs.200 lakhs. The setting up of necessary infrastructure would be encouraged through public private partnership to support exports. 1. Exemption from Entry Tax: For 100% EOUs and other EOUs with minimum export obligation of 50% of their total turnover, KIADB shall reserve 10 / 15 acres of land in all the industrial areas for allotment to the it is proposed to provide 100% exemption from payment of Entry Tax on purchase of ‘Plant & prospective entrepreneurs for establishment of CFS and other export infrastructure to encourage Machinery and Capital Goods’ for an initial period of 3 years from the date of commencement of exports. The promoter shall bear the land cost and meet the required funds in the project cost project implementation irrespective of zones. towards establishment of CFS.
It is proposed to have 100% exemption from payment of Entry Tax on purchase of raw materials, APMCs of the State would also be provided with nancial assistance towards the export inputs, component parts & consumables (excluding petroleum products) for an initial period of 5 infrastructure to promote exports in agro and food processing sector. The assistance will not be years from the date of commencement of commercial production irrespective of zones. provided for the land cost. However, APMC shall possess the required land and bear the gap towards development of infrastructure. 2. Refund of Certication Charges: Refund of expenses incurred for obtaining statutory certications like Conformity Europeenne 7. Support for creation of Export facilitation facilities, R&D and testing services: (CE), China Compulsory Certicate (CCC), GMP, Phytosanitary, Radiation etc., to the extent of One time support to Trade bodies / Associations for creation of Export facilitation, incubation 50% of expenses subject to a maximum of Rs. 1.00 lakh per unit. facilities, R&D and Testing Services etc., would be extended upto Rs.50 lakhs or 50 percent of cost whichever is less. The assistance will not be provided for the land cost. 3. Refund of Cost incurred for Export Consultancy/Market Intelligence Studies: Financial Assistance shall be provided to exporters whose annual turnover is less than Rs.5.00 8. Market Development Assistance: crores for availing export consultancy by the units towards market intelligence, market studies / Under the scheme, nancial assistance would be extended as follows: surveys and documentation through recognized consultancy organizations. The assistance shall be reimbursed to the extent of 50% of the cost subject to a maximum of Rs.2.00 lakh. South American Countries Assistance upto Rs.1.75 lakhs with the following component-wise cap: 4. Brand Promotion and Quality Assurance: 75% of the economy Air Fare subject to a maximum limit of Rs. 1.00 lakh. Financial Assistance shall be provided to the exporters whose annual turnover is less than 50% of stall rentals subject to a maximum of Rs. 50,000/- (for women & SC/ST Rs.5.00 crores for setting up of showrooms, warehouse, displays in international department entrepreneurs 100% of stall rentals shall be reimbursed subject to maximum stores, publicity campaign, testing charges, registration charges, brand promotion and assistance Rs.50,000/-), 50% of freight charges subject to a maximum of Rs. 10,000/-. for contesting anti dumping litigations. The expenditure towards the above shall be reimbursed DA of $ 100 per day for three working days. to the extent of 50% of the cost subject to a maximum of Rs.5.00 lakhs. Other Countries 5. Refund of fees for individual entrepreneurs incurred for certication courses on Assistance upto Rs.1.50 lakhs with the following component-wise cap: Export-Import Management: 75% of the economy Air Fare subject to a maximum limit of Rs. 75,000/- Course fees paid by individual entrepreneurs for acquiring certication courses on Export - 50% of stall rentals subject to a maximum of Rs. 50,000/- (for women & SC/ST Import Management conducted by IIFT, New Delhi and FIEO and other recognized institutions entrepreneurs 100% of stall rentals shall be reimbursed subject to maximum Rs.50,000/-) for a minimum duration of four months shall be reimbursed to the extent of 50% of the fees, 50% of freight charges subject to a maximum of Rs. 10,000/-. subject to a ceiling of Rs. 25,000 per candidate per course. This incentive shall be available only DA of $ 100 per day for three working days. for one time and for one course in the Policy period.
71 72 Study on Strategies for Promotion of Exports from Karnataka
9. Reimbursement of Export Credit Guarantee Insurance: C. Review and Monitoring Mechanism: Financial Assistance shall be provided to the exporters whose annual turnover is less than Rs.5.00 crores towards premium paid for Export Credit Guarantee Insurance for exporting the The State Export Promotion Council which has been constituted under the Chairmanship of products to risk prone countries like African, Latin American and CIS. The assistance would be Hon. Chief Minister vide G O No. CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 to reimbursed to exporters to extent of 10% premium paid subject to maximum of Rs.50,000/- per address Policy issues, formulation of suitable policy guidelines and action plan for annum. promotion of exports from the State would be broad based to suggest various initiatives, to address the bottlenecks that are hindering the growth of exports, to address the gaps in the 10. Financial Assistance for MSME, SC/ST, Artisans and Women Entrepreneurs: infrastructure and facilitate ease of doing business to encourage exports. Financial Assistance to MSME, SC/ST, Artisans and Women Entrepreneurs would be extended for their participation in exhibitions (including Dilli Haat and other Urban The State Level Export Promotion Committee (SLEPC) for ASIDE scheme which has been Haats) within the State and outside the State, as follows: constituted under chairmanship of Chief Secretary, Government of Karnataka vide G. O. No. Reimbursement of stall rentals upto Rs. 5,000/- within the State and Rs.10,000/- outside CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 would also regularly monitor the the State. implementation of policy initiatives in addition to monitoring of ASIDE scheme in the State. DA of Rs. 100/- (within the State) or Rs. 150/- (outside the State) for two persons per stall The Committee would be reconstituted with enhanced the terms of reference by involving for an exhibition period of maximum 15 days. key Departments / Agencies of Central and State Governments, representatives of exporters Second class Railway Ticket for two persons per stall. associations, leading export houses and other stakeholders for smooth coordination and for the resolution of critical inter departmental issues to facilitate exports. 11. Support for development of exports in Gherkins, Rose Onions and Floriculture: It is proposed to provide 10% of the nancial assistance for procurement of imported seeds by The District Level Export Promotion Committee (DLEPC) which has been constituted under the exporters and towards training expenses for the farmers for the adoption of scientic the Chairmanship of Deputy Commissioner of the Districts vide G. O. No. CI 290 SPC 94 (P) methods in the growth of quality Gherkins, Rose Onions and Floriculture for exports. Bangalore, dated 28th Feb, 2005 would draw up comprehensive action plan for growth and development of exports from the districts. The Committee would also extend necessary guidance for District Industry Centre to prepare a exporters database, identication of industries / traders with potential products for exports, address the grievances of exporters and assist in the development and strengthening of the infrastructure in the Districts for the promotion of exports.
73 74 D. Appointment of Commissioner for Industrial Development and Director of Industries and Role and Responsibilities of the Export Commissioner of the State Commerce as Export Commissioner for the State:
Proceedings of the Government of Karnataka To implement programmes / schemes which are relevant to enhance the capabilities and Sub: Appointment of Export Commissioner for the State of Karnataka. competiveness of MSME sector for development and growth of exports from the State. To prepare annual action plan for implementation of the programmes / schemes in a time Preamble: bound manner. Export is considered as an important means for the development of the economy of the Country / To review the implementation of the programmes / schemes and to take corrective measures. State. After the formation of WTO, the World has become a Global Village. Liberalization, To conduct studies and surveys which are relevant to exports of the potential products and Privatization and Globalization have created many opportunities and challenges. It is very overseas markets. imperative that the Industries, in particular the MSME sector have to incorporate innovative and new technologies for production of quality products to withstand the global competition. To review and coordinate all export led efforts by different agencies of Centre / State Further, there is a need to enhance the capabilities of MSME sector to sustain and penetrate new Government and trade bodies / associations. markets to augment their business development. To organise capacity building programme to enlarge the exporters base in Karnataka. To develop the strategies which would support the development and growth exports from Government of India which is mandated for promotion of Foreign Trade, desired to bring the the State. States into the main stream for boosting the exports. Accordingly, Commerce Secretary, To develop the strategies to enhance the skill sets of human resource to meet the industry Government of India has requested the Government of Karnataka to appoint one of the Senior demand. Ofcers in the rank of Secretary as Export Commissioner of the State as a Nodal Ofcer to co- To address the gap in infrastructure such as land, water, power, roads, railways and ports, ordinate the implementation of programmes / schemes which are relevant to the development which are essential to support the export oriented units. and growth of exports from the State. To suggest the policy measures to State Government for preparation and implementation of In this regard, it is felt that the Commissioner for Industrial Development & Director of short & long term measures / plan for enhancing the growth of exports in the light of Industries & Commerce who is in the rank of Secretary to Government spearheads the entire emerging national and international economic scenario. gamut of activities related to Industrial Development and he is also a nodal ofcer for promotion To review export performance of various sectors, identify constraints / bottlenecks that are of investment and development of SEZs in the State, would be the appropriate authority to be hindering the growth of exports and suggest industry specic measures for optimization nominated as Export Commissioner to look after the Export Promotion activities in the State. of exports. Further, Commissioner of Industries is also the Chairman of Visvesvaraya Trade Promotion To review the existing institutional framework for imports and exports and suggest remedial Centre, which is the nodal agency for the promotion of exports from the State and rendering measures for further streamlining to achieve the desired objectives. Secretarial services for the development of SEZs. To implement / undertake the policy initiatives which are approved by State Government and suggest steps to rationalize and channelize such schemes for optimisation. Hence the following order. To suggest the Centre / State Government for simplication of regulatory procedures and GOVERNMENT ORDER NO. CI 213 SPI 2014, BANGALORE DATED 6.9.2014 In the circumstances explained above, Commissioner for Industrial Development & Director of reforms for ease of doing business in facilitating exports. Industries and Commerce has been hereby nominated as Export Commissioner of the State in To suggest the Government to evolve facilitation mechanism for approvals / clearances from addition to discharging of his duties as Commissioner of Industries to spearhead the various departments / agencies. implementation of export promotion programmes / activities in the State. The Role and To co-ordinate for formulation of sector specic policies, Export Promotion Policy and IPR Responsibilities of the Export Commissioner of the State are highlighted in Annexure - I. Policy to encourage growth and development of exports. To encourage the MSME to adopt best practices available across the globe to enhance their By order and in the name of capabilities and competitiveness. Governor of Karnataka To support for development of R&D centres, testing centres, training centres to encourage exports. Implementation of the incentives and concessions which are available under industrial (S. Umadevi) Desk Ofcer (Technical Cell), policies and sector specic policies to encourage exports. Commerce & Industries Department
75 76 Study on Strategies for Promotion of Exports from Karnataka
To encourage local entrepreneurship and start up venture with focus on knowledge sector. E. Strategies proposed: To prepare the road map on WTO / IPR activities to encourage research and development, innovations and facilitating in Patenting. Central and State Governments have been taking various measures and initiatives in terms of To develop the strategies for commercializing, standardizing and branding the geographical both soft and hard interventions towards increasing exports. Major initiatives and strategies, indications globally. which will help exports from Karnataka both in terms of soft and medium strategies and long Identication of new/potential GIs and its ling with the GI Registry term strategies suggested are as follows: To recommend & address the issues which are considered relevant / essential for promotion of international trade. To suggest steps to strengthen the institutional mechanism to enhance the competitiveness 1. Soft Intervention of products & services of Karnataka and to increase the market share globally. Identication, scrutiny, appraisal, monitoring, review and evaluation of projects / critical i. Govt. of India’s Foreign Trade Policy 2013-14 has the following features: infrastructure which are implemented under ASIDE scheme. 3 % interest subvention scheme towards export credit Organizing / participation in National/International Exhibitions & Trade Fairs, Overseas Harmonizing of Zero Duty EPCG and 3% EPCG Scheme into one scheme which will be a Trade Delegation, Networking for B2B, B2G, B2C meetings for promotion of Trade. Zero Duty EPCG Scheme covering all sectors. Implementation of Market Development Scheme for overseas market research, study, B2B The total number of countries under Focus Market Scheme and Special Focus Market meet, participation in overseas exhibitions / trade fair and trade delegations. Scheme becomes 125 and 50 respectively. Financial support to the all artisans, SC, ST, women entrepreneurs of Micro and Small Market linked focus product scheme extended till March 2014 for exports to USA and EU Enterprises, who participate in the Trade Fair and Exhibitions. in respect of items falling in Chapter 61 and Chapter 62 of ITC(HS). Government to come out with new guidelines to promote SEZs. Compilation of Export Statistics of the State. Focus on market diversication to continue. Conferring of State Export Awards for their Excellency in Exports. Steps to be initiated for reducing transaction cost of exports Coordinating with foreign Trade bodies, Consulates, Trade Commissioner to facilitate international trade from the State. It is noted that Policy is being announced year-on-year. It would be preferable it is announced for Rendering secretariat services for Development of SEZs / EOUs in the State and extending of a ve-year period and provisions for interventions for improvements during the period. Such a various incentives as per State SEZ Policy. system would be useful from the point of view of the stability as also enabling improvements. To co-ordinate with the Development Commissioner, SEZ in establishment of SEZ / EOU units in the State. The features of the Foreign Trade Policy would provide the framework for the State Government Establishment of Incubation Cell to nurture the budding exporters. to evolve strategies for enhancement of exports. To formulate the strategy for development of product specic clusters in the State and its implementation. The Trade Bodies have indicated that these have been helpful to exporters. However, they have To co-ordinate for development of industrial parks / industrial areas / estate in the State for also expressed the need for more initiatives for encouraging exporters. growth of exports. To co-ordinate for establishment of ICD/CFS in potential destinations of the State ii. The soft interventions from the State Government suggested are as follows: Establishment of International Desks of Germany, Japan, Taiwan, USA and UAE and other Export Awareness Programmes. potential countries for attracting FDI and for trade promotion. Export Training Programmes. To provide an effective mechanism against cyber crime with regards to piracy, leakage of Export Management Training Programmes. trade secrets, copy rights, trademarks to protect Intellectual Property Rights. Seminars, Workshops & Conferences. Implementation of Cross Border Entrepreneurs scheme and Angel Funding to support the Interaction and Open Houses Meetings. start up companies in the State. Participation in National/International Exhibitions & Trade Fairs for Promotion of Trade Financial Support to the all Artisans, SC, ST, women Entrepreneurs of Micro and Small To promote brand Karnataka globally. enterprises, who participate in the Trade Fair and Exhibitions. Conferring State Export Awards for Export Excellence.
77 78 Market Development Assistance (MDA) Scheme for Foreign Visits for business growth and development of exports from the districts. The Committee would also promotion. extends necessary guidance for District Industry Centre to prepare a exporters database, Disseminating Overseas Live Trade Enquiries. identication of industries / traders with potential products for exp. ASIDE Scheme. WTO and IPR relay cell is established at VTPC. 2. Hard Interventions Incubation centre, Facilitation cell, R & D cell, Entry strategies Assisting the traders/exporters in certication for the export/ import of commodities. i. Infrastructure VTPC is authorize to issue certicate of origin (non preferential ) Export infrastructure is a key to support exporters for movement of goods and logistics of Conducting of Short term courses in association with IIFT New Delhi. shipment. Infrastructure development needs hard interventions from the Government. Most Trade point to provide live trade enquiry, Global directory services & online trading infrastructure projects need a longer time horizon and therefore, strategies for development facility. could be categorized as follows: Government of Karnataka is promoting sector specic SEZs / Park in the potential sectors Short & medium term strategies like Aerospace, Nano Technology, Bio Technology, Pharma etc., to promote investment. Long term strategies
iii. Trade Facilitation Measures Such an approach would be useful in according the right priorities for bridging infrastructure VTPC has established facilitation cell to facilitate trade in the state by addressing the gaps, which are doable in a shorter period horizon of 3 to 5 years and planning larger projects grievances of the exporters. The Trade facilitation centres have been established at which require relatively a longer period and in different phases. Bangalore, Hubli, Dharwad and Mysore. WTO and IPR cell has been established to create awareness on the WTO provisions and ii. Short & medium term strategies to promote innovations from the state. Identication of infrastructure gaps and taking up projects in the short & medium term would be State Level Single Window Clearance Committee (SLSWCC) and High Level Clearance required for drawing up the order of priorities. An identied shelf of projects for lling Committee (HLCC) facilitates for the approvals of investment proposals for the State in a infrastructure gaps are as follows: speedy manner. Karnataka Udyog Mitra is extending secretariat services for SLSWCC Expediting completion of projects approved under ASIDE Scheme. and HLCC. Promoting at least 10 sector specic SEZs across the State. The State Export Promotion Council has been constituted under the Chairmanship of Development of Chennai-Bangalore Industrial corridor. Hon. Chief Minister vide GO No. CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 to Development of Bangalore Mumbai Economic corridor. address Policy issues, formulation of suitable policy guidelines, action plan for Gems and jewellery SEZ at Bangalore. promotion of exports from the State, to suggest various initiatives and to address the gaps Upgradation of Seaports and Airports. in the infrastructure and facilitate for ease of doing business to encourage exports. Development of minor ports across the coastal region. The State Level Export Promotion Committee (SLEPC) for ASIDE scheme has been Jewellery designing centre at Mangalore. constituted under chairmanship of Chief Secretary, Government of Karnataka vide Improving of connectivity from industrial areas to State highways, National highways G. O. No. CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 would also regularly and Sea /airports. monitor the implementation of policy initiatives in addition to monitoring of ASIDE Proposed Textile parks at Mysore and Chamarajanagar. scheme in the State. Establishment of Granite Park at Chamarajanagar. The Export Facilitation Coordination Committee would be constituted under the Development of Food parks at Jevargi, Malur, Bagalkot and Hiriyur. Chairmanship of Additional Chief Secretary, C&I Department, Govt. of Karnataka. This NIMZ at Bidar, Gulbarga, Kolar and Tumkur. Committee will ensure for issual of necessary Government orders by various Promoting industrial investments by exporting units in SEZs. departments in relation to the Export Promotion initiatives and also recommend for mid Promoting private investments on rakes for rail transportation of containers, on similar course corrections/ measures for smooth implementation of the policy initiatives. lines as Box trains on the Bangalore-Chennai, Bangalore-Mumbai and Bangalore- The District Level Export Promotion Committee (DLEPC) has been constituted under Mangalore routes. the Chairmanship of Deputy Commissioner of the Districts vide G. O. No. CI 290 SPC 94 Promoting cargo complexes and container freight stations at large industrial areas and (P) Bangalore, dated 28th Feb, 2005 would draw up comprehensive action plan for along the export corridors.
79 80 Study on Strategies for Promotion of Exports from Karnataka
Establishment of Spice Parks at Shakaleshpur, Chamarajanagar, Bydagi, and ICD at Whiteeld is congested and scope for expansion is limited due to land availability Kushalnagar. issues. In the circumstances, it would be appropriate to plan for additional capacity of ICD at Improving facilities for screening of export cargo at air cargo complexes, ICDs and Malur, which has rail link. seaports for speeding up the process. Providing facilities for pre-inspection shipments at the custom bonded godowns. Seaports Promotion of sector specic clusters. Developing Mega Port at Tadri considering the vast land available, potential rail link and Promotion of industrial and logistic parks. road connectivity. SPV has already been created in this regard. VTPC and Exporters’ Association in Karnataka may consider joining hands for the NMPT vision 2020 has referred to creating Mega Container Terminal in the long run. following: Creating a Mega terminal will be useful to render NMPT as a potential port for main line a) Create warehousing facilities overseas for exporters near transit ports at Colombo, vessels enabling direct exports. Singapore, Dubai and one at Netherlands / Belgium. These transit ports would help Expansion of Karwar port by addition of berths and deepening the draft for receiving larger transship of goods on main line vessels and serve as gateways for foreign trade. size vessels. b) Explore the potential new and emerging markets in South Asian Association for Use PPP models for generating investments in seaport projects (greeneld and browneld). Regional Co-operation (SAARC) region, Asian, African and European countries. The Market Access Initiative (MAI) scheme of the Ministry of Commerce, Govt. of Airports India could be utilized for partial funding to carry out studies. Expansion of the BIAL along with facilities for rendering it an export hub for air borne cargo c) Introduce new schemes in consultation with the Exporters’ Association. Mangalore International Airport has introduced ights to the gulf region. The number of d) Leverage ASIDE scheme for bridging infrastructure gaps and viability gap funding ights will possibly increase over a period of time. The presence of Customs Department at for projects in PPP mode. Mangalore Airport will be useful for enabling clearances of air borne export cargo from the e) Sensitize C&F agents of the exporters to mention correct State Code of Karnataka in coastal region. The existing old terminal building at Mangalore Airport offers possibility of all the documents to get a true picture of exports. setting up an air cargo complex. The space would be adequate and providing screening & handling facilities would be possible for operationalizing the air cargo complex in quick iii. Long Term Strategy time. The matter needs to be taken up with the Customs Dept., as well as the Mangalore Airport Authorities in this regard. Road Connectivity Expansion of facilities at Belgaum or Hubli for facilitating air borne cargo from the north a nd The Hassan - Mangalore (NH48) needs to be doubled for providing speedy connectivity to central region of Karnataka. New Mangalore Port. Doubling would smoothen the movement of trafc and possibly ease congestion. Special Economic Zones (SEZs) / Parks / Regions Expediting implementation of Suvarna Karnataka Development Corridor Programme and Promote investments for expansion of existing sector specic SEZs for the manufacturing develop industrial export pockets at locations on corridor highways. sector for enhancing growth by leveraging the current status. Promote investments in new sector specic SEZs / Parks, Aerospace, Hardware, NANO Railway Connectivity technology, Biotechnology, Pharma and export hubs, where Karnataka has potential Speeding up of railway network between Hubli and Karwar to provide the impetus for strengths. developing Karwar port as an alternate gateway for exports from Northern and Central part Develop industrial pockets in Special Investment Regions (SIRs), ITIRs, NMIZ in line with of Karnataka. the guidelines of the Govt. of India. Doubling of railway lines between Mumbai-Bangalore-Chennai under ‘PRIDE’ Corridor Doubling of railway lines between Bangalore-Mangalore Inland Container Depots (ICDs) The 61 approved SEZs projects include 48 IT / ITES, 3 Biotech SEZ, one airport based SEZ and Enhancing the capacity of ICD at Belgaum for facilitating exports from north and 9 sector specic SEZs. The 61 approved SEZs will have an investment of Rs. 37,178 crores central Karnataka. providing employment for 11,64,645 persons. Enhancing the capacity of ICD at Hassan for facilitating exports from the Textile, Food Processing and Pharma SEZs at Hassan as also coffee, spices and other commodities from Presently, 25 SEZs are operational with an investment of Rs. 29,530 crores providing an Kodagu and Malnad region. employment for 1,93,743 persons.
81 82 Study on Strategies for Promotion of Exports from Karnataka (Rs. in crores) ASIDE Impl. F. Shelf of Projects identied for the growth and development of Exports Sl No. Name of the project Implemen ng Agency Project Cost during the 12th plan period: share Agency share 18 Establishment of Readymade Export KHDC 48.00 24.00 24.00 Garment unit cum incuba on centre, Identication of projects for improving export infrastructure is an ongoing process and a part of training centre and design studio. the strategy for supporting export initiatives. The proposals are identied to be taken up by 19 Processing and Cold chain facility in KAPPEC 45.00 27.50 27.50 various agencies / stakeholders for implementation to support the growth and development of Davangere, Haveri & Belagi District. exports from the State. The proposals which are to be taken up under ASIDE scheme would be 20 Improvement of road from Rabakavi - PWD 49.00 25.00 24.00 scrutinized by a sub-committee of the SLEPC for conformity with the guidelines before placing Mahalingapur - Handigund Terdal of to SLEPC for consideration. In respect of other infrastructural project would be forwarded to the length of 26 Km in Jamkhandi, concerned agencies to take up with the budgetary support of the State and Central Schemes. Mudhol Taluk at Bagalkot District. 21 Development of road from Karwar PWD 30.00 15.00 15.00 Railway sta on to Karwar port The Shelf projects identied are given below: (Rs. in crores) 22 Development of road from Gakarna PWD 60.00 30.00 30.00 Railway sta on to Tadadi harbour. ASIDE Impl. Sl No. Name of the project Implemen ng Agency Project Cost share Agency share 23 Development of road from Hannavar PWD 30.00 15.00 15.00 Railway sta on to Hannavar harbour. 1 Truck Terminal at Bangalore Bangalore Airport Rail Link Ltd. 155.00 30.00 125.00 24 Development of road from Bhatkal Railway PWD 30.00 15.00 15.00 2 Truck Terminal at Mangalore D. Devaraj Urs Truck 20.00 10.00 10.00 sta on to Bhatkal harbour. Terminals Ltd. 25 Inland Container Depot ( ICD) for PPP 57.00 40.00 17.00 3 Export Promo on Zone - Crea on of NMPT 40.00 30.00 10.00 Agro and Food Products at Davagere Inland Container Depot (ICD) and Container Freight Sta on (CFS) at 26 Pharmaceu cal and Biotechnology Air India SATS airport 28.00 20.00 8.00 Mangalore Sea Port. product handling facility at services Pvt. Ltd. Bangalore Interna onal Airport. 4 Infrastructure for Business Devpt. Park NMPT 20.00 15.00 5.00 for Export & Tes ng Centre at Mangalore. 27 Establishment of warehousing / CFS Central Ware - housing 210.00 150.00 60.00 infrastructure at Bangalore, Belgaum and Corpora on 5 Produc on centre for Silk fabrics KSIC 17.00 10.00 7.00 Mysore. 6 Automa on of Electronic Auc on IFAB 17.00 12.00 5.00 28 Establishment of Engineering and SPV 75.00 60.00 15.00 System (EAS) & upgrada on of exis ng CNC cluster. facili es at IFAB 29 Establishment of sheet metal and metal SPV 40.00 30.00 10.00 7 Establishment of CETP by MSEZ MSEZ 53.57 26.00 27.57 treatment cluster 8 Construc on of two lane flyover near MSEZ 37.22 18.61 18.61 30 Packaging & Plas c manufacturing cluster SPV 25.00 20.00 5.00 Jokkate junc on at MSEZ 31 Establishment of Advanced technology The Kudchi Agriculture and 25.00 20.00 5.00 9 Establishment of Export Centre at Mysore MIA 8.00 6.00 2.00 based jaggery processing unit to Small Scale Industries 10 Establishment of Gems & Jewellery Hu Gold Mines Ltd. 88.12 23.92 64.20 encourage exports Park / SEZ in Devanahalli, Bangalore. 32 Improvement of roads at main market yard APMC 30.00 24.00 6.00 11 Establishment of Granite Park in Mysore Minerals Ltd. 60.00 19.00 41.00 at APMC, Badami Badankoppe - Kellamballi village near 33 Improvement of roads at main market yard APMC 15.00 12.00 3.00 Chamarajnagar. at APMC, Shikaripura 12 Water Supply scheme of KIADB to KIADB 26.50 19.88 6.62 34 Improvement of roads at main market yard APMC 45.00 34.00 11.00 Industrial area, Hebbal 2nd stage, at APMC, Hubli Mysore from Cauvery River 35 Upgrada on & moderniza on of Belgaum Belgaum Material tes ng 3.50 3.00 0.50 13 Establishment of Mul Dimensional KILT 23.00 20.00 3.00 Material tes ng centre centre tes ng centre for Leather 36 Spice park at Hassan APMC 15.00 12.00 3.00 14 Providing Infrastructure facili es in the APMC 27.00 15.00 12.00 main market yard at Bijapur. 37 Spice park at Haveri (Chilli) APMC 15.00 12.00 3.00 15 Improvements to main market yard APMC 40.00 25.00 15.00 38 Spice park at Chamarajanagar (Turmeric) APMC 15.00 12.00 3.00 at Davangere 39 Sub-sta on at Aerospace SEZ, Devanahalli KIADB 15.00 12.00 3.00 16 Development works in the APMC 94.00 70.00 24.00 40 Telecommunica on facility at Aerospace KIADB 1.00 1.00 0.00 main market yard at Ranebennur SEZ, Devanahalli 17 Improvements to main market yard APMC 25.00 15.00 10.00 41 CETP at Hassan SEZ Tex le park KIADB 10.00 5.00 5.00 at Bagalkote
83 84 Study on Strategies for Promotion of Exports from Karnataka (Rs. in crores) ASIDE Impl. Sl No. Name of the project Implemen ng Agency Project Cost G. Areas and Goods for Anti Dumping and Tariff Protection share Agency share
42 CETP at Hassan SEZ Food park KIADB 10.00 5.00 5.00 The following are the products identied for anti dumping and tariff protection: 43 10.00 5.00 5.00 CETP at Dharwad SEZ KIADB 1. CFL lamps - Imported from Taiwan, 44 Moderniza on of Hubli - Dharwad VTPC 5.00 4.00 1.00 Exhibi on complex 2. Caustic soda - Imported from China 45 WTO & IPR Cell VTPC 2.00 1.80 0.20 3. Phenol - Imported from China 4. Nitrile Rubber - Imported from China and Taiwan 46 Establishment of CFS at Kushalnagar PPP 25.00 5.00 20.00 5. Acetone - Imported from EU, South Africa, Singapore, USA 47 Establishment of CFS at Davanagere PPP 25.00 5.00 20.00 6. Fiber board above 6mm thick - Imported from China, Malaysia 48 Establishment of CFS at Nanjanagud PPP 60.00 20.00 40.00 7. Red phosphorous - Imported from China 49 Providing infrastructure facili es for SPV 26.00 18.00 8.00 Floriculture & Rose products 8. Sodium Nitrate - Imported from EU, China, Korea 50 Common facility for Granite industries MML 35.00 25.00 10.00 9. Cast alluminium wheels - Imported from China, Korea and Thailand at Ilkal 10. Vitamin C and E tablets - Imported from China 51 Tex les Park at Chamarajanagar Karnataka Tex le Infrastructure 65.00 18.00 47.00 11. Flax fabric - Imported from China Development Corpora on. 12. sin drawn yarn / polyesters - Imported from China, Vietnam, Thailand 52 CETP Pharma at Hassan KIADB 10.00 5.00 5.00 13. Glass bres - Imported from China 53 GEMS & Jewellery Designing Centre at PPP 20.00 15.00 5.00 Mangalore 14. Cold rolled stainless steel - Imported from China, Korea, EU 54 Establishment of Warehousing / CFS CWC 24.77 10.00 14.77 15. Persulphates - Imported from Taiwan, Turkey, USA Infrastructure at Mangalore 16. Methylene chloride - Imported from EU, USA, Korea 55 Infrastructure Facility at Bangalore Air India SATS 18.00 12.00 6.00 17. Pre sensitized positive offset alluminium plates - Imported from China Interna onal Airport to facilitate exports of perishable cargo & cold chain 18. Injection moulding machines - Imported from China 56 Infrastructure facili es at Channapatna Channa-patna Cra s Park 10.00 7.00 3.00 19. Steel and berglass plates - Imported from China Cra s park at Channapatna 20. Axle beam and steering knuckles - Imported from China 57 Establishment of engineering SEZ at KIADB 60.00 30.00 30.00 21. Carbon black used in Rubber - Imported from China, Russia, Thailand Hubli and Belgaum 22. Phosphoric acid - Imported from China 58 Establishment ofAutomobile SEZ at kolar KIADB 60.00 30.00 30.00 23. Potassium carbonate - Imported from EU, China 59 Cold chain facili es for marine products Dept of fisheries 15.00 10.00 5.00 at Mangalore 24. Rubber chemicals (MBT/CBS/TDQ) - Imported from China 60 Post harvest technology centers at Gadag, KAPPEC 45.00 27.50 27.50 25. Electric insulators-ceramic and porcelain - Imported from China Kolar, Kodagu. 26. Sulphur black - Imported from China 61 Establishment of ICD/CFS at Dakshina CWC / CONCOR 450.00 300.00 150.00 27. Flexible slabstack polyol - Imported from China Kannada, Bangalore, Mysore, Udupi, Dharwad, U ara Kannada, Kodagu and Bellary. Way Forward 62 Dairy Project (UHD Milk) at KMF 95.00 25.00 70.00 The growth of exports from Karnataka requires full involvement and commitment from Chamarajanagar various sectoral departments viz., Agriculture, Horticulture, Mines & Geology, Industries & Total 2738.68 1562.21 1196.47 Commerce, Infrastructure Development Department, Energy Department, Sericulture, The 62 identied projects envisages an investment of Rs. 2738.68 crores with a proposed Textiles, Public Works Department, Tourism, Fisheries, IT/BT, Labour, Irrigation contribution under ASIDE scheme to the extent of Rs. 1562.21 crores during the 12th plan Department, Ecology and Environment etc. It is suggested that, each Department may be period. The projects are being pursued for sanction and approval under ASIDE. asked to consider allocating at least 2% of its budgetary allocation year-on-year for participating in export infrastructure related projects. All the identied projects would be placed before the State Level Export Promotion Committee (SLEPC) meetings by prioritizing for approvals. Creation of a Special Fund / viability gap fund through budgetary support for participating in export infrastructure projects in the PPP models. The fund could be used for participation in
85 86 development of infrastructure such as industrial areas, roads, power, seaports, airports, Inland Container Depots (ICDS) / Cargo Freight Station (CFS), road and railway connectivity etc.
A Committee chaired by Chief Secretary, Govt. of Karnataka may be constituted with Additional Chief Secretaries / Principal Secretaries of key departments as members for prioritizing and approval of export infrastructure projects. The funding support for such projects could be through pooling of the proposed budgetary allocation of 2% and Special Fund.
VTPC, Nodal Agency for promoting exports, is playing its mandated role of conducting capacity building programmes & events at different levels. Considering the limitations of VTPC, it would be a useful strategy to strengthen VTPC to play a proactive role in facilitating exports from across Karnataka.
Exhibit Illustrative view of the export process in India
87 88